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Seat occupancy up on domestic flights but concerns remain

Seat occupancy up on domestic flights but concerns remain
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First Published: Mon, Mar 15 2010. 09 12 PM IST

Graphic: Paras Jain/Mint
Graphic: Paras Jain/Mint
Updated: Mon, Mar 15 2010. 09 12 PM IST
New Delhi: Indian carriers are enjoying increasing occupancy on domestic routes compared with two years ago.
Analysts, however, warned that a sudden increase in capacity, hike in jet fuel price or a new service tax on domestic travel could offset the gain.
Domestic flights across airlines were 72-85.2% full in February, according to data released by the regulator Directorate General of Civil Aviation (DGCA) on Monday.
Graphic: Paras Jain/Mint
In contrast, occupancy rates for the same month in 2008 ranged between 58.3% and 75.9%, and between 66.3% and 82% in February 2009, when the country was in the middle of an economic slowdown.
National flag carrier Air India, which accounted for the lowest occupancy rate in February 2008, saw 72% occupancy in February.
“If capacity is constant and airlines are not adding too many seats, the existing flights will become full, which is what we are seeing,” said Samyukth Sridharan, chief commercial officer of India’s second largest low-cost carrier SpiceJet.
There were 5.50 million seats on offer in February 2008 on domestic routes by all airlines put together, which shrank to 4.87 million in February 2009 and rose to 5.30 million in February. The cuts were caused by a need to rationalize capacity due to the economic slowdown and rising fuel prices.
Sridharan said the number of passengers had also increased since 2008.
The DGCA data shows nearly 3.86 million passengers took to the skies in February, compared with 3.58 million a year ago.
“It is turning out to be a better-than-expected fourth quarter (January-March). Even the yield is better than what one expected in February,” said Kapil Kaul, India chief executive for the Centre for Asia Pacific Aviation.
“We have not seen a negative pricing and occupancy has held up,” Kaul said, referring to the discounts that kick in when airlines see flights going empty.
SpiceJet’s Sridharan said the advance-purchase fare policy, under which passengers pay lesser for tickets the earlier they book it, “is attractive enough for the consumer to take advantage of lower fares”.
For instance, a Rs5,000 Delhi-Mumbai ticket for the same day, or next week, would have cost Rs2,800 if booked a fortnight in advance.
Jet Airways (India) Ltd, along with its subsidiary JetLite, continued to lead with 26.1% of the passenger market share for February.
The firm said in an emailed statement that its international operations also saw 80.8% occupancy in February, compared with 76.5% a year ago.
Kingfisher Airlines Ltd continued to be India’s second largest by market share at 22.7%.
Air India was at 17.2%, IndiGo at 14.9%, SpiceJet at 12%, GoAir at 5.5% and Paramount Airways at 1.6%.
“Though there is a lot of optimism, you need to be very cautious,” Kaul said. “It’s only three-four months of growth.”
tarun.s@livemint.com
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First Published: Mon, Mar 15 2010. 09 12 PM IST