MUMBAI : India’s domestic air passenger traffic is expected to grow in the low single digits this financial year, slowing from several years of double-digit growth mainly because of a capacity shortage caused by the grounding of Jet Airways (India) Ltd, according to industry analysts.

Air traffic grew 13.6% in the financial year ended 31 March, showed data from the Directorate General of Civil Aviation (DGCA).

Passengers carried by domestic airlines during January to December 2018 stood at 139 million, up 18.6% from the previous year.

“Considering the non-revival of Jet Airways, Crisil Research expects the domestic passenger traffic growth for the industry to be low single digit, a tad above 2% in fiscal 2020," said Hetal Gandhi, director, Crisil Research.

“Slow capacity additions for the industry are forecasted factoring the grounding of Jet Airways, even as players are expected to induct significant aircraft either through fresh inductions, predominantly from Airbus or leasing of aircraft grounded by Jet Airways. We expect air fares to rise during fiscal 2020 (owing to slow capacity additions), as against flattish fares of fiscal 2019," Gandhi added.

Domestic air passenger traffic grew about 3% year-on-year in May 2019, reversing a 4.5% fall the sector witnessed in April.

The pace is much slower than the 16.5% year-on-year growth posted in May last year.

Domestic airlines carried just over 12 million passengers in May 2019 compared with 11.9 million in the year-ago period, according to DGCA data.

Jet Airways, before descending into crisis, had over 120 aircraft in its fleet, and carried over 30 million passengers a year. The airline took delivery of few Boeing 737 Max aircraft and held about a sixth of the total domestic market-share even while it was staring at a closure due to an acute fund crunch before finally stopping its operations on 17 April.

Aviation consultancy Capa India, in a recent report, said Jet’s closure leaves a significant gap in both the domestic and international market. While, domestic growth is expected to pick up during Q3 FY20 (October-December 2019 period), international traffic growth from India is expected to revive only by fiscal year 2021, according to the agency’s estimates.

“Domestic traffic growth will be muted (during FY20), with full-year traffic growth expected to be below 5% year-on-year. This will largely be as a result of growth picking up from Q3, FY20 with traffic expanding by 5-8% in the second half of the year," Kapil Kaul, Capa India’s chief executive said in a recent report.

“The high double-digit growth rates observed during the last five years are unlikely to return for the foreseeable future," Kaul said adding that international traffic during the fiscal is likely to be flat at best, and could even decline by up to 5%.

Meanwhile, after the closure of Jet Airways, a host of slots allocated to the airline at major domestic airports have been temporarily redistributed to other airlines, while a large number of Boeing 737 NG aircrafton its fleet have now been taken on lease by other airlines such as SpiceJet and Vistara.

However, a full ramp-up of sales of Jet Airways tickets, which moved to the SpiceJet fleet, will still take some time, ICICI Securities said in a report on domestic aviation sector that was released on 19 June.

“There could be only 7% and 14% aggregate domestic capacity growth for FY20 and FY21, respectively, for Indian airlines measured in terms of Available Seat Kilometers (ASK).

“This is based on certain assumptions in-line with the current situation. The assumptions are: (1) No MAX operations in FY20, (2) no resumption of Jet Airways, (3) only partial induction of Jet fleet (30 aircraft) into SpiceJet and (4) no additional aircraft intake by IndiGo apart from the current order book-driven induction of A320/321 neo fleet," it added.