Till recently, low-cost carriers accounted for almost two-thirds of all domestic air travellers. However in March this year, for the first time in Indian aviation history, 76.9% of domestic passengers flew low-cost airlines. The rest 23.1% flew with Air India, Jet and Vistara.
The reduced capacity saw spot airfares going through the roof, which led to fewer people opting to fly. And the cancellations, shows DGCA data for March 2019, saw 2.7 lakh domestic passengers finding their flights scrapped.
Cancelled flights hit air traffic growth
The big chunk of passengers whose flights were cancelled were of SpiceJet (2.3 lakh) and Jet (26,185).
The combined result was fewer people taking to the skies, crashing the growth in March 2019 over same month last year to 0.1%. A far cry from the heady days of growth Indian aviation had witnessed in the last five years, mainly on account of low oil prices till early 2018 that saw airlines offering low fares and flying becoming affordable.
October 2018 was the 50th straight months of double-digit growth (over the same month in previous year). In these months, peak growth was almost 30% for a few months in 2015-16. The past few months had seen airlines hiking fares due to several reasons like jet fuel getting costlier, rupee crashing and lower capacity. So the growth rate was falling, but was still at decent levels.
December 2018 was the last month of double digit growth when India had 1.3 crore domestic passengers, up 12.9% from December 2018. In January and February, the domestic growth rate had declined to 9.1% and 5.6%, respectively. But the grounding of Boeing 737 Max and Jet crisis have virtually flat-lined the growth story for what not so long back was the world’s fastest growing aviation market.
While Jet’s taking off again depends on its ongoing sale process being successful, the government is trying to revive growth by asking other airlines to speed up their aircraft induction to fill in the gap created by the airline. “We will add planes as slots have suddenly become available in the completely choked Delhi, Mumbai and Bangalore airports. Worrying signs are getting stronger as crude oil is inching to $80 a barrel and rupee is closer to 70 to a dollar. This will mean costlier jet fuel. The next government must rationalise jet fuel taxation as jet fuel price for domestic flights is among the most expensive in India globally. Unless that is done, there will be more Kingfishers and Jet Airways,” warned an airline official.
Airlines say the impact of high-cost structure for Indian carriers is that today there is only one airline, Air India—which is also on ventilator— that operates wide-body aircraft to medium and long-haul destinations like Europe, North America and Australia. “Instead of creating our own financially viable and strong Singapore Airlines, Lufthansas and Qatar Airways, the high-cost policy has meant India is just a feeder and catchment area for foreign airlines to fly people between India and rest of the world beyond Gulf and southeast Asia where narrow-body planes of our airlines can fly to,” said another airline official.
The drop in the number of flights of Jet and SpiceJet pushed up aircraft occupancy for all airlines in the lean travel months with all big players seeing their domestic flights going over 86% full, except Air India for which this figure was 80.8%.
“In March 2019, a total of 1,684 passenger-related complaints had been received by scheduled domestic airlines,” says DGCA data. The highest complaints were for Jet at 15.1 complaints per 10,000 passengers as the airline was majorly cancelling flights. And the biggest reason for complaints were “flight problems”.
SpiceJet chief sales and revenue officer Shilpa Bhatia said the LCC “has clocked the industry’s highest load factor for four years on the trot, a feat unparalleled in aviation industry. In March, our passenger load factor stood at 93%, which was the highest among the major scheduled carriers… We are extremely proud of our entire team for outperforming the industry month after month.”
Domestic air travel growth is likely to stage some recovery as airlines are speeding up their aircraft induction after Jet suspended operations. SpiceJet is planning to operate almost 30 of Jet’s Boeing 737s while AI and AI Express are looking at both the wide and narrow body of Jet for international flights. The aviation ministry is giving Jet’s unutilised slots to other airlines for three months.