After a drop of 4.4% in April, Air passenger traffic in India has reported a growth of 3.3% in May 2019, according to ICRA report. The growth is attributed to the capacity increase of the airlines and the resulted moderation of airfare.
IndiGo and SpiceJet have added around 15 and 25 aircraft in April and May 2019, registering a fleet growth of 7% and 33% respectively from March 2019. The duo together accounts for 62% of the domestic airline capacity.
While Indigo has announced a 30% increase in its capacity in FY2020 (approximately half of which will be for domestic operations), SpiceJet has announced an increase of 80%. As the airlines continue to expand their fleet, resulting in a gradual correction in the demand-supply imbalance and thus a further moderation in airfares, the domestic passenger traffic growth is expected to continue to increase, said Kinjal Shah, Vice President and Co-Head, Corporate Sector Ratings, ICRA.
All airlines have reported a month-on-month increase in their passenger load factor (PLF). Considering PLF on a year-on-year basis, only Air India and GoAir have reported improvements.
ICRA predicted that the airlines would start facing pressures on yields and thereby, profitability.
Meanwhile, the Civil aviation minister Hardeep Singh Puri has promised to help airlines to solve the problems affecting the aviation industry’s growth. “We have some turbulence in the sky. But I am confident we can meet that turbulence and turn it around,” Puri said at a conference organized by industry chamber Confederation of Indian Industry (CII).
The industry became crippled after the grounding of Jet Airways. It (aviation) is a sector which I believe has tremendous potential and we have every intention to exploit that potential to make it grow and, in the coming years, we (can) become a leader in that sector. There are many mistakes we have made in the past. We need to correct those. We need to give domestic carriers a level playing field, Minister said.