Soaring fares shift airline market shares in the country

Soaring airfares have succeeded in keeping domestic air travellers grounded.

Soaring airfares have succeeded in keeping domestic air travellers grounded. In more bad news for the country’s bleeding aviation industry, air passenger growth between January and May stood at just 9 per cent, courtesy single digit growth in the months of April and May. Those who did fly continued to move from dominant full service airlines to cheaper no-frills carriers.

Around 19.25 million passengers took to the skies in Jan-May as against 17.65 million in the corresponding period of 2007 – a single digit growth rate. In the first three months of this calendar year, the industry had grown at a more respectable11-12 per cent over the year ago period. However, this was still the lowest quarterly growth posted in the last four years which saw some quarters recording scorching growth rates of as high as 45 per cent.

In April, it got worse with the industry clocking just 8 per cent growth compared to the same month last year. The deceleration continued in May, thus bringing down the overall growth rate for the five months starting January 2008. The culprit being rising airfares that has more than doubled in the past one year, with the maximum increase occurring in the last four months due to rising aviation turbine fuel (ATF) costs.

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To combat this sudden surge in airfares, passengers have continued to shift to the comparatively cheaper low cost carriers. The market share of state-owned Indian Airlines and Jet Airways, both full service carriers, reduced from 15.1 per cent and 21.6 per cent in April 2008 to 14.8 and 20.5 per cent in May.

On the ot her hand, low cost carriers Indigo, SpiceJet, Jetlite and Deccan gained. SpiceJet’s share jumped from 10.1 per cent in April to 10.8 per cent in May. Indigo improved slightly with a share of 11.7 per cent, while JetLite’s slice grew from 8 per cent in April to 8.6 per cent in May. Even Deccan Airways, which was the only low cost carrier that lost share in April, gained some ground by capturing 14 per cent of the market in May.