Air traffic declines first time in four years on back of rising fares

Air traffic declines first time in four years on back of rising fares
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First Published: Sat, Jul 12 2008. 12 58 PM IST

Updated: Sat, Jul 12 2008. 12 58 PM IST
New Delhi: Air traffic growth contracted in June for the first time in nearly four years as rising fares deterred travellers, and at least one airline executive said he expects the decline to accelerate.
The number of passengers carried by India’s airlines declined 3.8% to 3.5 million in June, traditionally a strong month in the aviation business, from 3.64 million a year earlier, according to data released by the Directorate General of Civil Aviation (DGCA) on Friday.
“This is the first time in four years, but to be honest, it is not surprising,” said Samyukth Sridharan, chief commercial officer at the low-fare airline SpiceJet Ltd, India’s third largest carrier by passengers flown. “If June is minus 3.7% then July will be even deeper; at least minus 11-12%.”
Historically, July-September is a lean period for India’s airlines, which profit from traffic growth in June, when summer vacations are on.
In May, airlines carried 4.11 million passengers, a rise of 6.8% from 3.85 million a year earlier.
Rising jet fuel prices—which have almost doubled in the past year—have forced airlines to pass on the increase to passengers. Fuel surcharges levied on passengers jumped to as much as Rs2,900 per ticket in June, from Rs900 in the same month last year.
Airlines are piling up losses and deferring new aircraft inductions as they are buffeted by rising costs, including fuel prices. The aviation industry is estimated to post a combined loss of about $2 billion (Rs8,540 crore) this fiscal year.
All the country’s 10 airlines flew fewer passengers per flight in June, with low-fare carriers such as Deccan Aviation Ltd-run Simplifly Deccan taking a hit even as full service airlines such as Air India, run by the National Aviation Co. of India Ltd, increased market share after lagging behind most of this year.
SpiceJet announced flight reductions by as much as 20% this month, taking the number of daily flights to about 94 from an earlier 117. It also pulled out from short-haul routes such as New Delhi-Jaipur.
Jet Airways (India) Ltd continued to be India’s largest airline group, with a 29.3% share of the total passenger market for June, according to DGCA. Kingfisher Airlines Ltd followed with 27.1% and Air India with 16.4%.
For the first six months of the year, passengers flown expanded a modest 7.5% from the first half of 2007. Between January and June this year, airlines carried a cumulative 22.7 million passengers compared with 21.12 million in the first half of 2007.
After a dizzy ride that saw the aircraft fleet of scheduled airlines doubling to nearly 392 in three years, the slump in June has airlines saying that supply of seats has exceeded the demand.
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First Published: Sat, Jul 12 2008. 12 58 PM IST