Air traffic grows 1.8% but occupancy drops despite discounts

SpiceJet traffic and occupancy level fell in March

Domestic air traffic grew marginal 1.8% in March in comparison to same month last year but occupancy fell from 75.6 percent to 71.7% during the month despite a slew of discount offers by airlines. The total number of passengers flown in March 2014 was 5.16 million compared to 5.07 million in same month last year.

SpiceJet kick started a series of discount offers from January and other airlines reacted by following suit. However SpiceJet's total number of passengers flown declined from 1.05 million to 9.41 lakh. SpiceJet's load factors fell from 76.1 percent in March 2013 to 68.9 percent two months ago.

The Sun-group promoted airline had launched its first offer in January - a three day offer in which passengers could book tickets at 50 percent price and for travel till April 15.

Rival IndiGo, GoAir and Air India saw a growth while Jet Airways passenger volume also declined as it cut down flights. Jet Airways and Jet Konnect carried 1.18 million passengers compared to 1.23 million passengers in March 2013

IndiGo's passengers increased from 1.4 million to 1.6 million passengers but its occupancy too dropped from 79% to 73.3 percent. Air India too showed an increase in loads. The national carriers passengers flown was up from 9.07 lakh to 9.51 lakh in March 2014 while its load factor also remained unchanged at 74%.

SpiceJet management had earlier said the discount offers are win-win are a win-win for customers, for airlines, and for the travel industry and the economy overall, as it leads to significant demand stimulation.customers get to enjoy deeply discounted fares, airlines get to reduce wastage of seats that would otherwise fly empty, and others in the travel eco-system get more business. Executives of rival airlines have been skeptical of such offers as India is a highly seasonal air travel market.

A Spicejet spokesperson in a statement said, "Last March our passenger numbers were higher partially due to the fixed-price Rs 2013 network-wide sale for which a sizeable proportion of seats were made available; the sales this year under new management were more tightly capacity controlled to prevent unit revenue (RASK) dilution. SpiceJet rationalized its network and reduced capacity in Jan-March 2014 given soft economic conditions, while some other airlines continued to add capacity in a market where there is already overcapacity; passenger share is naturally correlated with capacity share.While market share is not in itself the goal, SpiceJet gained market share in March 2014 relative to Feb 2014 partly due to its market stimulation efforts".