After tangible signs of economic recovery, airlines are again betting big on the south Indian destinations to profit from the increasing outbound traffic. With rising importance of South East Asian destinations for leisure travellers, the traffic is set to grow more in near future.
Further, as Indian trade engagement with Association of South East Asian Nations (ASEAN) grow, business travellers will also flock to airlines to travel to these destinations.
The aviation industry in general had to go through difficult times during recession due to lesser corporate traffic last year. However, figures for January show passenger traffic going up by 22 per cent to 4.14 million passengers compared to 3.37 million passengers during the same month last year. Most airlines enjoy passenger load factors up to 80 per cent in case of low cost airlines. Full service carriers are witnessing a load factor up to 70 per cent.
Some of the airlines which had reduced their frequency during recession, are again resuming their flights to different south Indian destinations.
Dragonair, a wholly-owned subsidiary of Cathay Pacific, had reduced the frequency of its flights on the Bangalore - Hong Kong route to four from seven during recession. However, the airline resumed daily services recently in the wake of the increasing traffic.
“As we have witnessed an uptick in traffic in the last quarter of 2009 and first two months of 2010, we have decided to resume daily operation,” Tom Wright, General Manager of India, Middle East, Africa, Pakistan, Bangladesh and Nepal, said.
The company is witnessing a load factor of more than 80 per cent as of now, he said.
Cathay Pacific, which operates flights from South East Asia to the Indian subcontinent, is also bullish about its south India operations.
Singapore Airlines has a significant stake in the south Indian market. The airline operates daily flights from south Indian cities like Bangalore, Chennai and Hyderabad to different south east Asian destinations like Singapore, Hong Kong, Kuala Lumpur among others.
A company official said that the airlines had not reduced the frequency of flights during recession despite a fall in load factor. The airlines is witnessing increased load factor from last quarter of 2009, she said.
Referring to this issue, Manish Saigal, partner, KPMG said, “South East Asian nations are the preferred destinations for Indian tourists these days as it is cheap and an alternative to European countries for vacation. As the vacation season starts with summer, traffic is set to improve for airlines in the near future. Also, South East Asian nations with substantial south Indian population is a natural destination for people of this region.”
Load factor, which was down by 25-30 per cent during the recession, now stands at 70 per cent and is expected to improve further, he said.
India, which signed a free trade agreement (FTA) with ASEAN in August, 2009, is also expected to give a boost to business traffic.
“Trade engagement with ASEAN will also see more business traffic from this region. While India has a substantial trade with Thailand in textiles and tourism, its trade interests in Indonesia are palm oil, chemicals, crude oil. After India-ASEAN trade agreement for goods, business traffic will definitely see a rise,” Saigal said.
He, however, said outbound traffic from India was more than inbound traffic.
