Air travel growth dives to one-tenth: Economic slowdown not to blame; here’s the REAL reason

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Updated: October 15, 2019 5:13:22 PM

The passenger growth has taken a massive hit this year and has slipped from 20-25% growth in the first six months last year to 2-3% this year.

Domestic air traffic,air traffic growth, aviation news, DGCA, Jet AirwaysEven amid the economic slowdown, the growth of the travel industry has been hindered due to internal factors and not overall macroeconomic activities.

Indian air travel industry seems to be still recovering from the woes created by the grounding of Jet Airways. Suspension of the Naresh Goyal-founded airline continues to cast a long shadow several months later. While major rivals including SpiceJet, IndiGo, Vistara and GoAir moved quickly to fill the void created by Jet Airways, the capacity expansion has not borne desired results and the same is evident in the growth of passenger volume. “This year, India will see single-digit growth in terms of passengers,” Balu Ramachandran, Senior VP, Cleartrip, told Financial Express Online.

“Multiple reports put the expected number between 15-18% as the growth prospect this year. However, what we have seen so far is about 3%. It is because of lesser capacity expansion,” Balu Ramachandran said. There has only been 3% expansion in domestics air travel capacity on-year, which has also limited the growth of the Indian aviation industry, he added. Cleartrip gets about 80% of its sales from air ticket bookings and the rest from hotel bookings in India.

Even amid the economic slowdown, the growth of the travel industry has been hindered due to internal factors and not overall macroeconomic activities. “This year, whatever capacity has been increased has gone to replace Jet Airways capacity. The passenger growth is in line with the capacity increase this year. That does not mean the recession is not here, it is just that data does not support that yet,” Balu Ramachandran said. The passenger growth has taken a massive hit due to this and has slipped from 20-25% growth in the first six months last year to 2-3% this year.

Calling it a blip that may last for between six months and a year, Balu Ramachandran said that Cleartrip still remains bullish about the travel industry. “The consumer sentiment is not hit too much, there are no job losses as far as the travel industry is concerned. The growth can be sustained if there is a capacity expansion in at least double-digits,” he added. The travel industry is down but it won’t go into a downward spiral if capacity is checked and the pricing is right.

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