Persistent high airfares will also take a toll on the passenger traffic, with the growth in the number of domestic travellers expected to moderate to 8-12%.
Air passengers must brace to continue to pay high airfares for some more time, as the air travel ticket prices are unlikely to cool down till at least July 2019, says a report. While domestic carriers are grabbing plum Jet Airways slots, the void created by the grounding of Naresh Goyal-founded airline is yet to be filled up. Around 480 slots out of 766 slots vacated by Jet Airways have been redistributed to other airlines such as IndiGo, SpiceJet and Vistara, The Indian Express reported citing government sources. Persistent high airfares will also take a toll on the passenger traffic, with the growth in the number of domestic travellers expected to moderate to 8-12%, CARE Ratings said in the report.
International travel to get cheaper
However, on the other hand, there may be a reason for international travellers to heave a sigh of relief. International airfares are expected to moderate in the coming two months to July, as domestic airlines ramp up international operations, the report said. Budget carrier SpiceJet had recently announced that it will offer SpiceBiz feature ie business class seats on its international flights. SpiceJet is also adding international flights to Bangkok, Hong Kong, Jeddah, Dubai, Colombo, Dhaka, Riyadh, and Kathmandu which will be from Mumbai.
Jet Airways’ loss is others’ gain
There is a silver lining for the aviation industry, forming out of the Jet Airways crisis. Most Indian airlines, which have been reeling under financial pressure for some time, are likely to benefit out of this situation as they will register better-operating margins, a CARE Ratings report said. “With reduced competition and improved airfares, operating margins for airlines would improve during FY20. We do expect all airlines to report operating profits during FY20,” the report said. However, the profitability will highly depend on the prices of crude oil, it added.
Previously, a report by Prabhudas Lilladher had also said the major airlines in the country have reported an increase in their market share post Jet Airways shut down. However, IndiGo has emerged as the biggest beneficiary as it was able to expand its market share to 47%.
The airlines have been reporting low profits and some even net losses, owing to higher ATF prices, slashed airfares due to competition and currency volatility in FY18 and FY19.