Air pocket: Domestic air traffic growth slows down to 12.9% in December

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Updated: January 23, 2019 7:11:47 AM

December’s growth was the second-slowest in 16 months; traffic had increased by 12.43% y-o-y in July 2017. Demand for air travel had grown at 11% y-o-y in November, 2018, a 51-month low.

Domestic air traffic growth in December slows down to 12.9 per cent

Domestic air traffic growth in December, 2018 slowed down to 12.9% year-on-year even though it was a seasonally strong travel month. Experts attributed the somewhat slow growth to an increase in domestic fares of 3% y-o-y in December. In fact, except for AirAsia, all airlines reported a fall in passenger load factors (PLF).

December’s growth was the second-slowest in 16 months; traffic had increased by 12.43% y-o-y in July 2017. Demand for air travel had grown at 11% y-o-y in November, 2018, a 51-month low.

Over 138.9 million passengers took flights in 2018 calendar, up from 117.1 million in 2017. Airlines reported PLFs of between 82.1 and 93.7% for the year. .

According to the data released by Directorate General of Civil Aviation (Dgca) on Tuesday, over 12.69 million passengers travelled by air during December as compared to 11.24 million in December 2017.

“Airfares were high during November-December period as compared to 2017, which impacted traffic growth. We have airlines passing on higher input costs to passengers during this period,” Balu Ramachandran, head (air & distribution), Cleartrip, said.

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India’s domestic air traffic was growing at 20.9% y-o-y between January and September 2018 due to airlines choosing to absorb rising costs like aviation turbine fuel (ATF) and rupee depreciation.

The domestic air travel market expanded by 17.3% y-o-y during 2017 while the local traffic grew at 23.1% y-o-y a year before that.

Experts believe the growth was driven by cheap fares as airlines led by market leader IndiGo added around 130 new aircraft to their fleet during 2018.

“Average fares on domestic routes were down 9% y-o-y till September, which kept the growth over 20%. The airlines were keen on filling the additional capacities and did not pass on the higher input costs like additional ATF prices to the flyers,” Ramachandran added.

The average aviation turbine fuel (ATF) prices were up 30-35% y-o-y during 2018. The yields fell for all major airlines during 2018 due to intense competition.
In terms of passengers flown, budget carrier IndiGo serviced 57.63 million flyers during 2018, up 24.2% y-o-y. The passenger count at Jet Airways, which is facing a severe financial crunch, was up 3.3% y-o-y to 21.46 million passengers during last year.

National carrier Air India flew 17.61 million passengers in 2018, up 13% y-o-y followed by low-cost carrier Spicejet which increased it customers by 10.8% y-o-y to 17.1 million. Wadia group-owned GoAir carried 12.46 million passengers domestically in the year gone by, up 24.4% y-o-y. It was followed by Tata Sons joint ventures AirAsia and Vistara which recorded 57.8% and 29.4% growth in passenger traffic respectively.

IndiGo strengthened its market share to 41.5% during 2018 as compared to 39.6% reported a year ago. It was followed by Mumbai-based Jet Airways at 15.5%, which lost 230 bps. Air India ended the calendar year with 12.7% of the domestic market pie, down 60 bps while SpiceJet’s market share slipped 90 bps to 12.3%. Go Air reported 50 bps jump in market share to 9%. AirAsia and Vistara too gained 120 and 30 bps respectively in the domestic market.

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