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Corporate Jan 18, 2013

Indigo still remains India’s favourite as one-fifth seats go unsold

By Sindhu Bhattacharya

The domestic aviation market is shrinking and how. Between January and December 2012, 18.44 lakh less passengers took to the skies compared to calendar 2011.

Though this shows up a mere 3.04 percent decline in percentage terms, the drop in air traffic in actual numbers is serious enough to alarm the industry.

Is this due to the overall economic situation, unusually high fares during the peak season or massive travel cuts by corporate fliers? Reuters

According to data released by aviation regulator DGCA, only 588.19 lakh people took domestic flights last year against 606.63 in 2011.

Is this due to the overall economic situation, unusually high fares during the peak season or massive travel cuts by corporate fliers? Perhaps all three reasons together accounted for this massive fall in domestic air travel.

During December alone, the decline was 2.26 lakh passengers from 56.3 lakh to 54.04 lakh. Airlines have already begun cutting capacities along lean routes and even the Ministry of Civil Aviation has been taking the decline in air traffic seriously enough. Just recently, it asked the country's largest airline (by passengers carried), IndiGo, about traffic projections for 2013 before allowing it to import the entire quota of 16 new aircraft.

A senior ministry official told Firstpost there were allegations against the airline that it was dumping capacity on metro routes and the ministry is already conducting a detailed traffic study to determine how much more capacity addition is needed this year. The ministry has allowed it to import 5 aircraft and will take a call on the remaining 11 in its next meeting. It is expected to be strict on aircraft import by other airlines as well.

The DGCA data also showed that IndiGo remained the preferred choice of Indian travellers since it maintained its hold on 27 percent of the market, which means more than one in four Indians prefer to travel by IndiGo. Air India also stayed put at 20 percent, becoming the preferred airline for one in five fliers but Jet Airways (standalone) was lower than even 19 percent, showing its declining hold over the domestic market. Taken together with JetLite (6.7 percent) though, it was a comfortably over the 25 percent mark. SpiceJet and GoAir were at 19.2 percent and 7.6 percent respectively.

Yet another barometer for airline viability, apart from market share, is load factor which means number of seats it can fill on an aircraft. Despite December being the peak month, Jet Airways, JetLite and SpiceJet could not fill even 8 out of 10 seats on their aircraft.

So essentially, 20 percent capacity on these airlines remained unsold. This, despite competitive fares from all airlines. Jet Airways had about 23 percent seats empty, the lowest load factor among all airlines. IndiGo had the highest load factor of 87.3 percent and its low fare peers SpiceJet and JetLite reported 78.1 percent and 79.5 percent respectively. Air India and GoAir were at 82.4 percent.

In terms of on-time performance too IndiGo was clearly ahead at 84% but Air India fell back to the good old days with less than 7 in 10 flights operating on time. GoAir and Jet together with JetLite managed to fly 8 in 10 flights on time but SpiceJet could only manage 78.3 percent OTP.

by Sindhu Bhattacharya

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