More low-fare flights lift air traffic 21.3% in July

Capacity addition in the low-fare segment and better spending power due to stock markets climbing up led to huge recovery in demand for air travel last month with the number passengers taking to sky jumping 21.3% to 30.67 lakh from 25.29 lakh in July last year.

Industry experts said the spike in the domestic passenger traffic in July was mainly due to airlines shifting more capacity to the lower end of the fare basket. This, they said, was spurring demand.

Ankur Bhatia, managing director of Amadeus, believes passenger numbers were returning to 2007 levels, when demand for air travel was flying high on very low fares.
“Last year, during this time, tumble in the number of domestic flyers had already started. So, compared to those numbers this year’s numbers are better. Also, fares this year are lower than last year. Another reason is stock market doing well. This has put more cash in the hands of people,” he said.

An industry source said fares had shot up last July because of high fuel prices. In August last year, crude oil prices had peaked at $140 per barrel. Today, it is hovering around $70 per barrel.

“The demand had shrunk last year because high fuel prices had forced airlines to hike their fares. Last July, fares were averaging at Rs 4,800 per passenger. This year, average industry fare is around Rs 3,000 per passenger,” he said.  

Last month also saw Naresh Goyal’s Jet Airways and JetLite reclaim leading position in the market with a 26.3% share. The two airlines overtook Kingfisher Airlines, whose share dipped 1.4 percentage points to 23% in July over June.

“Jet has gained market share (2.3 percentage points) because it deployed more JetKonnect (all economy service) flights,” said an industry expert, who did not want to be named.

Other airlines that cornered more market share in July were budget airlines IndiGo and GoAir, whose share increased to 14% and 5.7 from 13.6% and 5.4% respectively in June.  State-owned Air India and budget carriers SpiceJet lost seven basis points and three basis points at 16.2% and 12.5% respectively. Business class airline Paramount Airways maintained market share at 2%.

In terms on-time-performance (OTM), Paramount topped at 87.6%. It was followed by IndiGo and Kingfisher Airlines with OTMs of 86.5% and 81.2% respectively. National Aviation Company of India Ltd (Nacil) has lowest OTM at 76.5%.

Jeh Wadia-owned GoAir had the lowest flight cancellation rate of 0.6% followed by Nacil, whose cancellation rate was 0.7%. Among national scheduled airlines, JetLite’s cancellation rate was highest at 6.2%.