New Delhi Domestic air passenger traffic declined 4.58% from 2,317,915 during March 1-7 to 2,211,838 in the week ended April 7, indicating that higher airfares, among other factors, were affecting demand, according to aviation analysis website NetworkThoughts. Can do.
Air passenger traffic, which had seen a V-shaped recovery in recent months, declined only during the outbreak of the latest wave of the COVID-19 pandemic.
Data from NetworkThoughts shows that an additional 2% of flights deployed by airlines during this period also put pressure on airlines’ load factor.
“The traffic has not increased as expected even after the lifting of the ban. The reason for this will be a mix of exam season and high ticket costs,” said Ameya Joshi, an independent aviation analyst and founder of Network Thoughts.
“With this some airspaces are undergoing upgrades, thus limiting the operating hours and reducing the movement of air traffic and passengers,” Joshi said. Airfares on popular routes have increased by over 60% year-on-year, mainly due to hike in Aviation Turbine Fuel (ATF) prices, according to data from online travel portal Exigo.
According to Alok Bajpai, co-founder and group CEO, “While search queries for travel have increased due to a decrease in demand, bookings are still not growing in line with searches due to higher airfares.” , ixigo.
However, corporate and business travel is on the rise, Bajpai said. “With most organizations moving back to the hybrid work model and virtual events to physical mode, the demand for work-related travel continues to grow,” he said.
The ATF price, which is updated every fortnight, was at a record high on April 1 due to rising crude oil prices. ATF price increased by 20.74% on April 1 as compared to a month ago 1,12,924.83 per kiloliter in Delhi, while it was in Kolkata, Mumbai and Chennai 1,17,353.71, 1,11,690.61, and 116,583.71 per kiloliter respectively. ATF accounts for 30-40% of the airline’s cost structure in India and a hike in prices threatens to reduce profit margins of airlines, which have been facing huge losses in the last few quarters due to the pandemic.
Rating agency Icra Ltd, in a report released earlier this week, said domestic air passenger traffic is likely to be around 84 million during FY22, nearly 59% higher than the previous year and above pre-Covid-levels. 40% less.
“Due to geopolitical issues arising out of the Russian invasion of Ukraine, the ATF prices have increased by about 93% year-on-year in April 2022, given the rise in crude oil prices,” the Icra report said. “
It added, “Atf prices increased by geopolitical issues will remain a near-term challenge for the industry and a major determinant of profitability for the industry.”
Meanwhile, airlines have no option but to pass on the rising cost burden on the customers. “It is a delicate balance between passing the costs on to customers and maintaining demand. However, most airlines are not in a position to bear the high cost as a result of rising oil prices,” said a senior airline official requesting anonymity.
Last month, Ronojoy Dutta, chief executive officer of India’s largest airline IndiGo, urged the central government to bring ATF under the Goods and Services Tax (GST) for the benefit of airlines and customers. Dutta had argued that the rationalization of taxes would lead to higher growth for the sector, create a multiplier effect in the economy, boost trade, tourism and job creation.
Indian airlines may suffer a record loss of more than 20,000 crore in FY 2012, 44% higher than the previous year, according to a report by rating agency CRISIL Ltd. It expects domestic air traffic to recover to pre-pandemic levels by the fourth quarter of 2022-23.
Spokesmen for major airlines did not comment on higher airfares and its impact on demand.