Mumbai: In sync with a slowing economy, the decline in air passenger traffic in India continued for the seventh consecutive month in January, hitting the private airports hard.
Revenue loss: A file photo of Delhi airport. Domestic carriers, expecting a loss of at least $2 billion, have pulled out at least 15% capacity. Harikrishna Katragadda / Mint
The flow of traffic fell 11% year-on-year (y-o-y) in January. While domestic passenger numbers declined 15.3% y-o-y, international passenger traffic, which lately saw some growth, was virtually flat for the first time in January, adding to the airport developers’ woes.
Among the metro airports, Mumbai, Delhi and Kolkata in January reported y-o-y declines of 2.7%, 2.3% and 2.6%, respectively, in international passenger numbers, according to Airports Authority of India (AAI) data. This is the latest data available on its website.
For the Delhi airport, it was the first-ever decline in international passenger traffic in the past five years. The last time a decline in international passenger numbers was seen in January 2004 at this airport, then run by the government.
As part of the airport modernization programme, a GMR Group-led consortium is running Delhi’s Indira Gandhi International Airport through Delhi International Airport (P) Ltd (DIAL) and a GVK group-led consortium is operating Mumbai’s Chhatrapati Shivaji International Airport through Mumbai International Airport Pvt. Ltd (Mial). The GMR Group has also built a greenfield airport in Hyderabad and a consortium led by German conglomerate Siemens AG has built a greenfield airport in Bangalore.
The government has decided to modernize Chennai and Kolkata airports with the help of AAI.
Along with the passengers, there has been fall in cargo traffic, too.
“The fall in passengers and cargo at airports will have a direct impact on the revenues of airport developers. The collection of airport development fee and user development fee at airports will go down,” said Raajeev B. Batra, executive director (advisory services) at audit and consulting firm KPMG India.
Airports, including Delhi, Mumbai, Hyderabad and Bangalore, charge a development fee from passengers that ranges between Rs100 and Rs375 per ticket for domestic travel.
“Not only will the direct revenues take a hit, but also the non-aeronautical revenues be affected as most of the airports have entered into revenue-sharing agreements with operators of duty-free shops and others at airports,” Batra added.
However, a Mial spokesperson said, “Non-aeronautical revenues will cushion the downfall in the aeronautical revenues.”
Admitting that the drop in aircraft movement and passenger traffic have an impact on aeronautical revenues, the spokesperson said overall, there has not been much of an impact as yet, as non-aeronautical revenue stream is continuing. “Our contracts with real estate developers at airports are long-term. If this downward trend continues for a year, our revenues will be hit.”
DIAL executives declined to comment on the matter.
Domestic carriers, which are expecting to post a combined loss of at least Rs10,000 crore for the fiscal that ended 31 March, have pulled out at least 15% capacity from the domestic market.
Many international carriers, except those from West Asia, have done the same.
According to the Directorate General of Civil Aviation (DGCA), the airlines flew 7% fewer passengers during February, compared with the same month last year.
The airlines cut fares by about half in February, but the number of passengers declined to 3.33 million from 3.58 million a year ago, and only marginally higher than 3.32 million in January. DGCA is yet to come with passenger figures for March.
While DGCA collates data for the overall air traffic and market share of the carriers, AAI publishes airport-specific traffic data.
In January, the decline in the overall passenger traffic at Hyderabad, Delhi and Mumbai airports have been 18.8%, 10.4% and 13.1%, respectively.
In the first 10 months of fiscal 2009, between April 2008 and January, international passenger traffic in Delhi and Mumbai declined by 2.3% and 2.7%, respectively, but grew 4.1% y-o-y at Hyderabad.
A 2 April report of domestic brokerage Motilal Oswal Securities Ltd, authored by analysts Satyam Agarwal and Nalin Bhatt, said in January, total air traffic movement was 110,000, down 5.3% y-o-y.
According to the report, cargo traffic declined 8% y-o-y to 126 million tonnes in January; domestic cargo declined 9% y-o-y and international cargo 7%.
For the first 10 months of the fiscal year, cargo traffic remained flat; the 2.1% y-o-y growth in domestic cargo was offset by 2.8% y-o-y decline in international traffic.