The number of airline passengers in India will continue to fall, at least until the end of the year, a senior executive with aircraft manufacturer Boeing said.
MUMBAI: The number of airline passengers in India will continue to fall, at least until the end of the year, a senior executive with aircraft manufacturer Boeing said.
The number had fallen for the first time in three years after a number of factors, including an increase in fares, led to passengers opting for other modes of transport.
Dinesh Keskar, senior vice-president, sales, Boeing, said, “In India it is a classic case of supply-demand elasticity. The airlines are reluctant to charge more as passengers then go for other modes of transport. This is likely to remain the case for the new two or three months, until airlines’ restructuring takes effect.”
Seattle-based Boeing says ‘yield dilution’ - lesser money is being generated - due to overcapacity, is one of the major challenges facing Indian carriers.
Keskar added that airlines should also look at marketing the significantly large cargo-carrying capacity offered by new-age airplanes. He also said carriers like Air India should look at increasing business class capacity on routes like the India-New York non-stop, where the national carrier is said to be witnessing a full load.
“Selling one business class seat is similar to filling up 6-7 economy class seats,” Keskar said.
According to Boeing estimates, Indian carriers have a significantly large gap to fill before they break even on a per passenger basis.
Boeing estimates the break even fare on the Mumbai-Delhi sector on their 737 aircraft would be at $154, while in reality, fares, including surcharges, currently total to only $121.
Of this nearly $82, will go towards fuel costs, while airlines recoup only $71 through fuel surcharges. For a shorter route, like Mumbai-Hyderabad, the break even is estimated at $104 compared to the current average fare of $72.
And despite the downturn in fortune of the Indian aviation industry, Boeing has upped its estimate for the number of aircraft the country would need for the next twenty years from 911 to 1001.
At 2007 list prices, these would cost $105 billion. The planemaker currently has an India order book totalling 164 aircraft worth $25 billion.
n_john@dnaindia.net
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