New Delhi: India’s domestic air passenger traffic has almost doubled in the past six years led by strong economic growth and emergence of low-fare airlines, according to data compiled by aviation regulator Directorate General of Civil Aviation (DGCA).
Indian airlines flew 99.88 million passengers in 2016 compared with 51 million in 2010, the data shows.
Airlines also flew more passengers per flight on an average. Average seat occupancy rates rose to 83.9% in 2016 from 76.6% in 2010.
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Another key trend over these years was the domination of budget airlines who have wrested market share from full service airlines such as Air India and Jet Airways.
Low-fare airline IndiGo controls nearly 40% of the domestic market share, more than the combined share of Air India and Jet Airways.
Kingfisher Airlines shut operations in 2012 because of a massive debt burden and widening losses. “The traffic is now with the low-cost airlines," said Harsh Vardhan, a former head of the erstwhile regional airline Vayudoot.
In the past decade, there used to be a difference of 8-12% in the ticket prices of budget and full service airlines, said Vardhan.
“That has been eroded," Vardhan said. “Yield is no longer a criteria. Belly filling is the first criteria now."
The 2010-2016 growth compares with a similar trend from 2005 when the base was way smaller at 23 million air passengers and flight occupancy stood at 67%.
This was also the time when most budget airlines, including SpiceJet, IndiGo and GoAir were launched.
India has close to 450 planes in service and about 900 planes on order, indicating of the growth that lies ahead, according to consulting firm CAPA. “The ratio of orders to in-service aircraft is the highest of any major market in the world. India’s growth prospects are reflected in its strong aircraft order book. The ratio of around 1.75 aircraft on order to the aircraft in service is one of the highest in the world, even higher than the UAE," said CAPA’s South Asia CEO Kapil Kaul.
The International Air Transport Association (IATA) too expects India to displace UK as the third-largest aviation market by 2026.
Indian airlines were expected to touch 100 million passengers in 2016-17, a feat they almost touched in 2016 with 23.18% growth.
Still, Vardhan warns profits could come under pressure.
“The first few quarters of this fiscal were fine but we are now seeing increasing fuel prices and dollar differential which will certainly impact airline balance sheets," he said.