Wednesday, March 20, 2019

Indian Growth Rates To Slow as Airlines Cut Capacity

 - March 19, 2019, 8:11 AM

With airline seating capacity throughout India down about 20 percent from its peak, the country appears set to lose its standing as the world’s lowest-airfare market. About 100 airliners now sit grounded or out of service, suggesting the aviation sector will almost certainly not see the near 19 percent growth many forecasters projected for this year.  
The March 10 Ethiopian Airlines Boeing 737 Max crash near Addis Ababa prompted Indian authorities to ground some 13 Max jets flown by SpiceJet and five by cash-strained Jet Airways, an airline that already had grounded 56 airplanes due to financial troubles. Others include GoAir, nine of whose Airbus A320neos await engine spares; Air India, which has grounded 17 airplanes for similar reasons; and IndiGo, which has taken out of service 10 airplanes and cut some 100 flights a day due to a pilot shortage. 
“Capacity reduction is likely to see annual growth come down to 14 to 15 percent,” said Vishok Mansingh, CEO of Mumbai-based aviation consultancy CAV Aero. “With this reduction fares will likely go up by 10 to 15 percent. In the long term, the increase in fares is good for the stability of aviation in India.”
Most carriers have experienced heavy losses due to rock-bottom competitive fares.
The reduction in seat capacity is the most severe on the Delhi-Mumbai city pair, which commands a 50 percent share of the domestic market. The closure of a runway at Mumbai’s Chhatrapati Shivaji Maharaj International Airport for repair three times a week during peak hours until the end of March has exacerbated the situation. Fewer flights have resulted in soaring fares. A study done by online travel agency Yatra has shown airfares in the sector have doubled over the last year. “While comparing the domestic air traffic of January 2019 with last year, there has been a growth of about 9 percent," said Yatra COO Sharat Dhall. "The percentage of growth has been affected due to unprecedented flight cancellations by various airlines impacting the overall capacity and market growth adversely.” 
Meanwhile, SpiceJet is working on reducing cancellations through more efficient use of its existing fleet of 64 aircraft, adding two wet-leased Boeing 737s and canceling low-yield routes. SpiceJet will now fly a planned Max route from Hyderabad to Jeddah starting March 25 with the 737-800.
Despite the initial pain, some good may come from the pullout of aircraft,” an airline official told AIN. “The smallest carrier, AirAsia India, may just get some slots at major constrained metro airports released by airlines unable to retain them,” he noted.

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