Domestic air passenger traffic growth managed to remain in the green in March growing falt or 0.14 per cent, largely due to the huge capacity reduction following the troubles at Jet Airways in the month, show the monthly data released by the DGCA Monday.

The cumulative traffic of 11 domestic airlines stood at 11.59 million in March compared to 11.58 million passengers a year ago, as per the data.

The March numbers are a big setback to the industry which had been clipping at over 20 per cent for more than four years in a row. After a record run-rate in high double digits, traffic has been on a lower altitude in January when it grew 9.1 per cent, first single-digit growth in four years, and lost the momentum further in February when the incremental growth was capped at a low 5.62 per cent.

The disappointing March numbers can mostly be attributed to the troubles that Jet had been facing and the resultant spike in ticket prices across other airlines. The airline was finally grounded last week.

Jet Airways, once the second largest airline after no-frills IndiGo, lost as much as nearly half of the market share to 5.37 per cent during the month under review as against 10 per cent in the same period of last fiscal.

Together with subsidiary JetLite, the consolidated traffic of the now non-functional carrier was 6.71 lakh passengers in the month, whereas in the same period last year it had flown 15 lakh passengers on its own.

Budget carrier IndiGo continued to be the largest player with a market share of 46.9 per cent ferrying 54 lakh passengers during the month, while its closest rival SpiceJet was a distant second with 13.6 per cent of the total traffic pie carrying 15.81 million in March.

Significantly, the national carrier Air India, which has a number of aircraft on the ground for quite some time now, had the dubious distinction of cancelling the maximum number of flights or 8.94 per cent of its scheduled departures, followed by JetLite and new entrant Star Air.

The passenger load factor in March has shown falling trend compared to February due to the end of the vacation period.

SpiceJet continued its spree of highest average seat occupancy across its planes at 91.4 per cent while GoAir topped the on-time performance chart for the sixth consecutive month at 95.2 per cent.

Domestic air passenger traffic growth managed to remain in the green in March growing falt or 0.14 per cent, largely due to the huge capacity reduction following the troubles at Jet Airways in the month, show the monthly data released by the DGCA Monday.

Domestic air passenger traffic growth managed to remain in the green in March growing falt or 0.14 per cent, largely due to the huge capacity reduction following the troubles at Jet Airways in the month, show the monthly data released by the DGCA Monday. The cumulative traffic of 11 domestic airlines stood at 11.59 million in March compared to 11.58 million passengers a year ago, as per the data. The March numbers are a big setback to the industry which had been clipping at over 20 per cent for more than four years in a row. After a record run-rate in high double digits, traffic has been on a lower altitude in January when it grew 9.1 per cent, first single-digit growth in four years, and lost the momentum further in February when the incremental growth was capped at a low 5.62 per cent. The disappointing March numbers can mostly be attributed to the troubles that Jet had been facing and the resultant spike in ticket prices across other airlines. The airline was finally grounded last week. Jet Airways, once the second largest airline after no-frills IndiGo, lost as much as nearly half of the market share to 5.37 per cent during the month under review as against 10 per cent in the same period of last fiscal. Together with subsidiary JetLite, the consolidated traffic of the now non-functional carrier was 6.71 lakh passengers in the month, whereas in the same period last year it had flown 15 lakh passengers on its own. Budget carrier IndiGo continued to be the largest player with a market share of 46.9 per cent ferrying 54 lakh passengers during the month, while its closest rival SpiceJet was a distant second with 13.6 per cent of the total traffic pie carrying 15.81 million in March. Significantly, the national carrier Air India, which has a number of aircraft on the ground for quite some time now, had the dubious distinction of cancelling the maximum number of flights or 8.94 per cent of its scheduled departures, followed by JetLite and new entrant Star Air. The passenger load factor in March has shown falling trend compared to February due to the end of the vacation period. SpiceJet continued its spree of highest average seat occupancy across its planes at 91.4 per cent while GoAir topped the on-time performance chart for the sixth consecutive month at 95.2 per cent.

Air passenger traffic growth slows to a whimper in March, ending a 4-year record

A major conundrum facing India’s aviation industry is the high growth rate of passenger traffic, both domestic and international.&nbsp;

CAPA, a highly regarded private consultancy, has predicted domestic traffic to grow at 14-16 per cent annually, while internationally, traffic is pegged to rise by 10-12 per cent from FY2020.&nbsp;

IATA has also predicted that India will be the third largest air passenger market by 2025.

While the top dozen airports make profits, the rest 100 odd are loss-making. Of these, half-a-dozen private airports also share their revenue with the Airports Authority of India (AAI). The rest are owned and managed by the AAI, which cross-subsidises the balance.&nbsp;

While the present double-digit growth in passenger traffic is likely to continue, massive investments in the airport and air traffic management are needed to overcome a deficient infrastructure.&nbsp;

Despite double-digit growth, profitability is declining. The original national carriers, Air India and Indian Airlines, were merged in July 2007 in a hair-brained scheme devised by the then minister.&nbsp;

The new entity has not managed to survive without the government’s life support. Since it’s fully owned by the government, no attempt has been made by the previous or the present government to revive it, as was done in the case of Satyam in 2009 or the Japan Airlines.&nbsp;

It’s painful to see that recently the government formed an SPV and transferred Rs 29,000 crore out of its Rs 55,000 crore debt, hiving off the profitable Air India Air Transport Services.&nbsp;

Meanwhile, Air India is fast losing its market share and may soon become irrelevant. Justifying it as a cost-cutting measure, Air India has reduced its Global Distribution System (GDS) agents to one, Travelport, which is represented in India by owners of Indigo Airlines - a direct conflict of interest.&nbsp;

The result is that the catchment area of passengers for Air India has shrunk, resulting in the once-premier airline announcing the suspension of three flights from Delhi - to Madrid, Birmingham and to Birmingham via Amritsar, respectively.

As for Kingfisher, Vijay Mallya is fighting against extradition in London courts.&nbsp; 
 
Jet Airways, started and owned by the enigmatic Naresh Goyal as a first-class full-service airline since 1992, too is fighting for survival.&nbsp;

In 1997, the business model of airlines in India changed dramatically with the arrival of a low-cost carrier, Air Deccan. This and other airlines gave up on the glamour quotient, providing just point to point services, sans any frills and lower ticket prices.&nbsp;

With the Indian economy growing at 7 per cent plus, there was an air traffic boom. A lot of people who used trains switched to LCCs.&nbsp;

While growth in air traffic has been in double digits for the last ten years, the growth in railway traffic for two-tier coaches and above has been minimal.&nbsp;

Full-service airlines, Air India, Kingfisher and Jet Airways, began their low-cost subsidiaries. However, by not closing their full services, they suffered.

With the high growth of passenger traffic, airlines started ordering new aircraft. Indigo in 2005 astounded everyone by ordering 100 single-aisle Airbus A320-200 aircraft and followed this up in 2011 by ordering another 180 aircraft of the same type, placing yet another order for 250 Airbus A320-Neo in 2015.&nbsp;

Meanwhile in 2016, the government allowed 100 per cent foreign equity in airlines but kept a cap of up to 49 per cent equity for foreign airlines wanting to invest in Indian carriers, mindful of the international requirement that an airline must be majority-owned and effectively controlled by the nationals of their country.&nbsp;

As new aircraft started arriving to join the fleet, the need to fill them up meant that prices had to be kept low, given India’s price-sensitive market.&nbsp;

A new system of computerised ticket price management was introduced to fill up seats. However, as the seat capacity in India grew, the need to keep prices low to attract travellers became desperate.

To add to this, there were two more variables that mattered. The first were oil prices, which keep fluctuating. But in India, domestic oil prices are kept artificially high by oil companies and the government benefits when prices go up as their share of tax revenue also increases. Therefore, there is little reason for them to lower Air Turbine Fuel (ATF) rates.&nbsp;

The second factor are foreign exchange rates. As the rupee slides down, airlines have to pay more for ATF in Rupee terms, which reflect on their balance sheet.

The net outcome is that the airline industry in India lost S1.7 billion in FY2018 and may lose another $550-700 million in FY 2019.&nbsp;

As more aircraft join the fleet, these losses are likely to continue. As airlines go into losses, the banking sector comes into play. While private banks tend to shy away from such risky loans, it is the public sector banks, in particular, the State Bank of India, that gets hit. &nbsp;

Public sector banks are not only nudged to give loans, but when these loans become nonperforming, are nudged to convert them into equity at a high rate, thereby absorbing partially the losses of the airlines.

The government must now reduce the tax burden on airlines, both directly and through unnecessary taxes/charges of supply of ATF, which is both monopolistic and very high.&nbsp;

With such a high growth rate of traffic, it is unlikely that revenues will fall. To avoid becoming an oligopolist structure, indiscriminate ordering of aircraft should be examined by some competent authority like the Competition Commission.

DGCA is obligated under Aircraft Rules to look into ‘excessive and predatory’ pricing.&nbsp;

(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-a-curious-case-of-plenty-2740001">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.) 
&nbsp;

A major conundrum facing India’s aviation industry is the high growth rate of passenger traffic, both domestic and international. CAPA, a highly regarded private consultancy, has predicted domestic traffic to grow at 14-16 per cent annually, while internationally, traffic is pegged to rise by 10-12 per cent from FY2020.

A major conundrum facing India’s aviation industry is the high growth rate of passenger traffic, both domestic and international. CAPA, a highly regarded private consultancy, has predicted domestic traffic to grow at 14-16 per cent annually, while internationally, traffic is pegged to rise by 10-12 per cent from FY2020. IATA has also predicted that India will be the third largest air passenger market by 2025. While the top dozen airports make profits, the rest 100 odd are loss-making. Of these, half-a-dozen private airports also share their revenue with the Airports Authority of India (AAI). The rest are owned and managed by the AAI, which cross-subsidises the balance. While the present double-digit growth in passenger traffic is likely to continue, massive investments in the airport and air traffic management are needed to overcome a deficient infrastructure. Despite double-digit growth, profitability is declining. The original national carriers, Air India and Indian Airlines, were merged in July 2007 in a hair-brained scheme devised by the then minister. The new entity has not managed to survive without the government’s life support. Since it’s fully owned by the government, no attempt has been made by the previous or the present government to revive it, as was done in the case of Satyam in 2009 or the Japan Airlines. It’s painful to see that recently the government formed an SPV and transferred Rs 29,000 crore out of its Rs 55,000 crore debt, hiving off the profitable Air India Air Transport Services. Meanwhile, Air India is fast losing its market share and may soon become irrelevant. Justifying it as a cost-cutting measure, Air India has reduced its Global Distribution System (GDS) agents to one, Travelport, which is represented in India by owners of Indigo Airlines - a direct conflict of interest. The result is that the catchment area of passengers for Air India has shrunk, resulting in the once-premier airline announcing the suspension of three flights from Delhi - to Madrid, Birmingham and to Birmingham via Amritsar, respectively. As for Kingfisher, Vijay Mallya is fighting against extradition in London courts. Jet Airways, started and owned by the enigmatic Naresh Goyal as a first-class full-service airline since 1992, too is fighting for survival. In 1997, the business model of airlines in India changed dramatically with the arrival of a low-cost carrier, Air Deccan. This and other airlines gave up on the glamour quotient, providing just point to point services, sans any frills and lower ticket prices. With the Indian economy growing at 7 per cent plus, there was an air traffic boom. A lot of people who used trains switched to LCCs. While growth in air traffic has been in double digits for the last ten years, the growth in railway traffic for two-tier coaches and above has been minimal. Full-service airlines, Air India, Kingfisher and Jet Airways, began their low-cost subsidiaries. However, by not closing their full services, they suffered. With the high growth of passenger traffic, airlines started ordering new aircraft. Indigo in 2005 astounded everyone by ordering 100 single-aisle Airbus A320-200 aircraft and followed this up in 2011 by ordering another 180 aircraft of the same type, placing yet another order for 250 Airbus A320-Neo in 2015. Meanwhile in 2016, the government allowed 100 per cent foreign equity in airlines but kept a cap of up to 49 per cent equity for foreign airlines wanting to invest in Indian carriers, mindful of the international requirement that an airline must be majority-owned and effectively controlled by the nationals of their country. As new aircraft started arriving to join the fleet, the need to fill them up meant that prices had to be kept low, given India’s price-sensitive market. A new system of computerised ticket price management was introduced to fill up seats. However, as the seat capacity in India grew, the need to keep prices low to attract travellers became desperate. To add to this, there were two more variables that mattered. The first were oil prices, which keep fluctuating. But in India, domestic oil prices are kept artificially high by oil companies and the government benefits when prices go up as their share of tax revenue also increases. Therefore, there is little reason for them to lower Air Turbine Fuel (ATF) rates. The second factor are foreign exchange rates. As the rupee slides down, airlines have to pay more for ATF in Rupee terms, which reflect on their balance sheet. The net outcome is that the airline industry in India lost S1.7 billion in FY2018 and may lose another $550-700 million in FY 2019. As more aircraft join the fleet, these losses are likely to continue. As airlines go into losses, the banking sector comes into play. While private banks tend to shy away from such risky loans, it is the public sector banks, in particular, the State Bank of India, that gets hit. Public sector banks are not only nudged to give loans, but when these loans become nonperforming, are nudged to convert them into equity at a high rate, thereby absorbing partially the losses of the airlines. The government must now reduce the tax burden on airlines, both directly and through unnecessary taxes/charges of supply of ATF, which is both monopolistic and very high. With such a high growth rate of traffic, it is unlikely that revenues will fall. To avoid becoming an oligopolist structure, indiscriminate ordering of aircraft should be examined by some competent authority like the Competition Commission. DGCA is obligated under Aircraft Rules to look into ‘excessive and predatory’ pricing. (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Government must reduce the tax burden on airlines

&nbsp;A 25-year-old Chinese man, who felt "stuffy" and opened the emergency exit of a plane to get some fresh air has been detained and fined, a media report said today.

The man, identified only by his surname Chen, was waiting to disembark the plane at Mianyang airport in the southwestern province of Sichuan when he decided he could do with some fresh air.

Unfortunately for him, the handle he pulled was attached to the emergency exit and not only did the hatch come free from the plane, but it also activated the escape slide, the Hong Kong-based South China Morning Post reported quoting a Thepaper.Cn report yesterday.

Chen, who was returning from the island of Hainan, insisted he did not know that it was an escape route, adding: "Because it was so stuffy, so hot on the plane, I just pushed down on the window handle beside me. When the door fell out, I panicked."

The crew alerted police and he was detained for 15 days for the unauthorised removal of aviation facilities. He will also be fined 70,000 yuan (USD 11,000) to cover the airline's costs.

The airline, which was not named in the report, said it would cooperate with public security agencies in their investigation.

This is the latest in a string of safety incidents in recent years involving Chinese travellers opening emergency exits.

In April 2016 a 30-year-old bulldozer driver, who had never travelled by air before, ignored warnings by cabin crew and opened the emergency exit door to get some fresh air just before his flight took off from Shenzhen airport in the south of the country.

The man, who said he was worried about getting air sick, was detained for a week and fined 500 yuan after the flight was delayed for an hour.

The previous year, a man who said he thought the emergency escape handle was a handrail was given 10 days' detention and a second passenger was given a similar sentence for opening an escape hatch while waiting to board a flight at Nanjing airport.

China's civil aviation industry has responded by imposing a slew of penalties, including flying bans in addition to existing fines, on blacklisted travellers, the Post report said.&nbsp;

Unfortunately for him, the handle he pulled was attached to the emergency exit and not only did the hatch come free from the plane, but it also activated the escape slide

A 25-year-old Chinese man, who felt "stuffy" and opened the emergency exit of a plane to get some fresh air has been detained and fined, a media report said today. The man, identified only by his surname Chen, was waiting to disembark the plane at Mianyang airport in the southwestern province of Sichuan when he decided he could do with some fresh air. Unfortunately for him, the handle he pulled was attached to the emergency exit and not only did the hatch come free from the plane, but it also activated the escape slide, the Hong Kong-based South China Morning Post reported quoting a Thepaper.Cn report yesterday. Chen, who was returning from the island of Hainan, insisted he did not know that it was an escape route, adding: "Because it was so stuffy, so hot on the plane, I just pushed down on the window handle beside me. When the door fell out, I panicked." The crew alerted police and he was detained for 15 days for the unauthorised removal of aviation facilities. He will also be fined 70,000 yuan (USD 11,000) to cover the airline's costs. The airline, which was not named in the report, said it would cooperate with public security agencies in their investigation. This is the latest in a string of safety incidents in recent years involving Chinese travellers opening emergency exits. In April 2016 a 30-year-old bulldozer driver, who had never travelled by air before, ignored warnings by cabin crew and opened the emergency exit door to get some fresh air just before his flight took off from Shenzhen airport in the south of the country. The man, who said he was worried about getting air sick, was detained for a week and fined 500 yuan after the flight was delayed for an hour. The previous year, a man who said he thought the emergency escape handle was a handrail was given 10 days' detention and a second passenger was given a similar sentence for opening an escape hatch while waiting to board a flight at Nanjing airport. China's civil aviation industry has responded by imposing a slew of penalties, including flying bans in addition to existing fines, on blacklisted travellers, the Post report said.

Chinese air passenger feels 'stuffy', opens emergency exit for fresh air

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