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Passenger growth slips to 8% as airfares jump, economy slows

Passenger growth slips to 8% as airfares jump, economy slows

New Delhi/Mumbai: Airline passenger growth remained in single digits for the second straight month in January, an indication that higher fares and slowing economic growth are affecting air travel demand.

Airline passenger traffic grew 8.06% in January to 5.33 million people year-on-year, according to data released by the Directorate General of Civil Aviation (DGCA). In December, considered the peak season for air travel, growth had moved into single digits for the first time in three years.

“The volume is much bigger now and if it’s growing at that base rate it’s not bad," said an airline executive on condition of anonymity. The 8% growth in January means that an additional 440,000 passengers travelled by air in January, he noted. Passenger growth is likely to be 8-10% in 2012, the executive added.

Domestic fares within India have increased 18% in recent months, the highest rise in the Asia-Pacific region, according to the American Express Business Travel Monitor. In comparison, Asia-Pacific fares were overall up by 2% while domestic fares in the region rose by only 4% in the same period.

“High inflation rates and network disruption narrowing supply in the market have increased fare types across the board," said Sandeep Shastri, vice-president and general manager of American Express Global Business Travel.

“Economic pressures and supply variance has meant that LCCs (low cost carriers) have also increased air fares, which, has pushed the price of domestic travel up significantly, particularly during the last quarter," he said.

DGCA numbers for January, meanwhile, suggest that Jet Airways (India) Ltd (including subsidiary JetLite) was the biggest beneficiary of the capacity reduction by rival Kingfisher Airlines Ltd since November. Faced with a cash crunch, Kingfisher has been forced to curtail flights.

Jet’s market share rose by over 1 percentage point while Kingfisher’s was unchanged

In January, Jet was the market leader with a 28.8% share, followed by IndiGo (20.8%), Kingfisher Airlines (11.3%), Air India (17.1%), SpiceJet (16.3%) and GoAir (5.8%).

In December too, Jet was the leader with a 27.6% market share, followed by IndiGo (20.4%), Kingfisher (12.1%), Air India (17.4%), SpiceJet (16.8%) and GoAir (5.7%). Kingfisher’s second round of flight cuts announced in mid-February could actually reduce the airline’s market share to single digit, said the executive quoted above. The carrier has said it will operate less than half its aircraft fleet to tide over the cash crunch.

tarun.s@livemimt.com

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