| General |
| ICRA - Domestic Passenger traffic grows by 20% in June 2017 |
Riding on the back of a healthy seasonal demand and
thereby a healthy passenger load factor, the domestic passenger traffic growth
in June 2017 returned to 20% level after staying below the level for previous
four months. The Indian airlines continued to outperform the industry on
international routes, where the passenger traffic growth in June 2017 was 13.6%
against that of 8.6% for the industry. Increasing capacity deployment on
international routes is also reflected in increasing market share of the Indian
airlines on international routes.
According to Anand
Kulkarni, AVP and
Associate Head, Corporate Sector Ratings, ICRA, “The
financial performance of the industry will be comfortable during Q1 FY2018 due
to seasonal demand, strengthening of yields and favourable cost environment.
Though the demand might moderate to some extent during Q2 FY2018, the overall
cost structure will remain supported by moderate fuel prices during the
quarter. ICRA anticipates healthy capacity growth going forward and yields will
remain vulnerable to the pricing discipline in the industry.
As for the growth in industry capacity it
remained moderate in June 2017 at 14.0%, primarily due to below average
capacity addition by the market leader, Indigo. The airline has been facing
delays in deliveries of new aircrafts as well as operational issues in the
delivered aircrafts. However, going forward, the industry capacity addition is
likely to remain healthy with planned expansion by existing airlines and scale
up by new airlines. The recent suspension of operations of three regional
airlines has also opened doors for incumbents to pick and choose comparatively
lucrative routes – primarily in the southern parts of India – for scaling up
their operations. These routes might provide an added opportunity for the
industry to deploy the additional capacity.