 "Low fares, domestic tourism fuel air travel demand")
India is the fastest growing aviation market in the world, with traffic growing 20.2 per cent year on year.
The scorching pace is driven by low fares, rising demand in smaller cities and steady growth in domestic tourism.
Airlines in India flew 81 million passengers in 2015. And next year, 100 million passengers are expected to travel within the country.
Aided by a 24 per cent reduction in jet fuel prices average air fares on domestic routes have fallen 14 per cent to around Rs 4,500. This has led to a spurt in demand from leisure travellers and small and medium enterprises. The overall sector-wide occupancy rose to 82.5 per cent in 2015 from 76.4 per cent in 2014.
Analysts expect fares to remain range bound in 2016 due to a mix of lower crude oil price and an increase in capacity. They see market leader IndiGo as the biggest beneficiary because of its lower operating costs and fleet expansion plans. Aviation consultancy CAPA’s South Asia Chief Executive Officer Kapil Kaul expects IndiGo to outperform the market again and estimates IndiGo and GoAir will add 30 aircraft between them in 2016-17.
“Airlines have found a sweet spot and at Rs 4,000-4,500 we are seeing a lot of conversion from searches to bookings. In the last three months we have seen 45-50 per cent growth in airline bookings. We see strong demand from non-metros. Growth is largely driven by leisure travel and we have witnessed a surge in bookings over long weekends,” said Samyuth Sridharan, president of online portal Cleartrip.
“Close to 60 per cent of our customers today come from Tier 2 and Tier 3 cities and this has been fuelled by the increase in air capacity and lower fares. Capacity to destinations such as Visakhapatnam and Bhubaneswar has gone up. Destinations such as Gorakhpur and Surat have come on the aviation map. The connectivity has benefited corporate travellers,” said Karan Anand, head, relationships, Cox & Kings.
Airports in South India have seen the strongest growth with Kochi, Bengaluru and Hyderabad leading, according to CAPA. This has been led by the increase in frequency on existing destinations and new routes like Hyderabad-Lucknow and Hyderabad-Jabalpur. “Trujet began operations last year and Air Costa is expanding its operations. SpiceJet has come back from the brink of closure and is adding flights,” said Hemanth DP, chief operating officer, of Hyderabad Airport at CAPA aviation summit on Thursday.
Domestic traffic at Mumbai and Delhi grew 12 per cent while the top 10 airports operated by the Airports Authority of India registered 15 per cent growth in 2015-16.
FLYING HIGH
-
Airlines in India flew 81 million passengers in 2015
-
Next year, 100 million passengers are expected to travel within the country
-
The spurt in demand is caused by the fall in average air fares on domestic routes
-
The fares fell 14% aided by a 24% reduction in fuel prices
-
Analysts expect fares to remain range bound in 2016 due to a mix of lower crude oil price and an increase in capacity
