ATF consumption growth slows on less traffic

Domestic passenger traffic saw single-digit growth in December

It’s always a good indication of growth in this sector. So, when aviation turbine fuel (ATF) consumption in December grew much slower than the average for the current financial year, there were concerns.

This was reinforced by domestic passenger traffic also growing by only single digits in December, after a gap of two and a half years. However, sector experts say fears on the score of growth are probably overdone.

Jet fuel consumption in December grew 6.7 per cent, below the cumulative growth of 10.3 per cent during April-December. ATF consumption growth was 13.5 per cent in the 2010-11 financial year and 10.3 per cent in 2009-10.

Aviation experts agree there was some slowing in December. “It is due to the higher base effect of the earlier year, coupled with the fall in international travel due to the rupee depreciation and global slowdown,” said Amber Dubey, director, aviation, at global consultancy KPMG. International passenger growth in November was 5.8 per cent, compared to growth of 11.2 per cent during the same period last year.

He further explained that domestic traffic in December 2010 had surged to 5.2 million against the monthly average of 4.3 million in calendar year 2010. In December 2011, the domestic traffic was around 5.6 million vis-a-vis the monthly average of 5.1 million during the year.

“While the December to December growth is around eight per cent, at a year to year level, the domestic traffic growth is 16.6 per cent, perhaps the highest in the world. International traffic growth did slow down with the fall of the rupee, making global travel costlier,” he added.

Airline executives also say growth in December was huge earlier and there is a base affect involved. “Considering the growth in the month of December earlier, eight per cent growth is huge. We have no issue with volume growth in the domestic market,” said a senior executive with a low-cost carrier.

In December 2010, domestic passenger numbers grew 13.5 per cent, which was over a base of 36 per cent during the same month in 2009. Indian aviation is one of the largest growing markets in the world and has been growing in double digits. Only, even with these volumes, all the three listed airlines have made losses in the first three quarters of the current financial year.

All the three listed carrier have made combined losses of Rs 2,018 crore in the current financial year —Jet Airways and SpiceJet have made losses of Rs 937 crore and Rs 350 crore in the first three quarters and Kingfisher made losses of Rs 731 crore in the first two quarters.