Air ticket demand at a high despite fare hike

Written by Rhik Kundu | Mumbai | Updated: Nov 1 2013, 16:16pm hrs
Air ticketMarket leader IndiGo carried 13.79 lakh domestic passengers during September 2013, said a spokesperson of the airline.
Skyrocketing airfares havent deterred domestic travelers from flying during the festival season despite some routes recording their steepest price hikes. While fares have gone up in the range of 35-70% year-on-year during September-November, air traffic rose by 15-20% during the same period.

Domestic air passenger traffic, which stood at 45.55 lakh passengers ferried, jumped by 13.4 % in September 2013, up from 40.18 lakh carried during the corresponding month last year, data furnished by the civil aviation ministry showed.

However, on a month-to-month basis, the traffic decreased by 13.4 % as domestic airlines carried 45.55 lakh passengers in September, down from 52.60 lakh in August 2013.

Market leader IndiGo carried 13.79 lakh domestic passengers during September 2013, said a spokesperson of the airline. According to DGCA data, 10.94 lakh passengers had traveled by the airline during September 2012. Air India carried 9.2 lakh domestic passengers, compared with 7.75 lakh during the same period. Jet (Jet Airways and JetLite) carried 11.2 lakh domestic passengers, compared with 9.6 lakh during the same period. Spice Jet carried 7.86 lakh domestic passengers, compared with 7.43 lakh during the same period. Go Air carried 3.42 lakh domestic passengers as compared to 3.07 lakh during the same period.

Air Indias domestic operations achieved the highest overall occupancy in September at 73.2 %, followed by IndiGo at 70.3 % and SpiceJet at 67.9 %, data from the ministry of civil aviation showed.

IndiGo led the market among scheduled domestic airlines with 30.3% of market share, Air Indias domestic operations (20.3%), Jet Airways (19.1%), SpiceJet (17.3%), Go Air (7.5%) and JetLite (5.5 %).

Meanwhile, several domestic sectors saw a double-digit growth in passengers during September 2013. For instance, Delhi-Goa route saw a 50% increase y-o-y), Delhi-Kochi 32%, Mumbai-Goa 28%, Delhi-Hyderabad 21%, Chennai-Delhi 21% and Bangalore-Kochi 16%.

Analysts say airlines are now passing their losses, which affected them during the past one year due to the tanking of the rupee (with 80% of their costs being dollar linked) and the rise of ATF costs, to their customers.

While I havent corroborated the traffic data myself, the apparent inelasticity would tend to be on account of this being the traditional festive and holiday season. Travellers may be bearing the price increases in view of their holiday travel plans, Deloitte India director Peeyush Naidu said.

Some amount of the fare increases may also have been anticipated after the recent fuel price increase, he added.

Analysts expect the airfares and ticket demand to remain high till mid of January when the lean season kicks in.

A lot of airlines are now realising that there is no point to sell tickets below cost price, a practised they had championed earlier which led to artificial demand of air tickets, KPMG India partner and head (aviation) Amber Dubey said. What we are seeing now is very close to real demand.

Meanwhile, the overall airline bookings at travel portals like Yatra and MakeMyTrip are expected to be 40-50% higher during September-November quarter, compared with last year, the portals confirmed. Many of these bookings have been done much in advance.

The low-cost carriers have already expanded their domestic capacity for the coming winter schedule. Looking at the current market trend, even with the continuing high fares we are optimistic that air travel shall continue to rise especially with the festival season approaching, president Sharat Dhall said.