Indian domestic air traffic in Mar 2017 grew slowest since Sept 2015

Report released by ICRA predicts a slow growth year ahead

The Dollar Business Bureau

As per the measure of revenue passenger kilometres (RPK), a unit used to measure passenger volume, International Air Transport Association (IATA) reported that India’s domestic passenger traffic, during the month of March 2017, grew at the slowest rate since September 2015.

“China overtakes India as the fastest growing domestic market,” the monthly report stated.

Monthly air passenger market analysis report released by the international association, recorded a robust 7% first quarter global growth in passenger demand, which is well ahead of the long-run average of around 5.5%. However, the report cited the reasons for slow demand growth in India to be the ‘reduced cash supply’ and ‘wider economic uncertainty’.

To add to this sombre result, ICRA’s report further dulled the prospects of growth in the current fiscal, stating that air traffic growth in India is expected to slow down marginally, jeopardising profitability of airlines banking on robust growth. ICRA forecasts a growth rate of 13-15% in FY 2017-18, as against a growth of 22% in 2016-17.

India’s airline industry is also threatened by factors such as rising fuel prices, intense price competitiveness, and infrastructure bottlenecks due to the unviability of PPP (Public Private Partnership) projects’.

Unseating India from the top position, China posted the fastest year on year domestic growth rate for the first time in two years. The Asian giant’s domestic air passenger demand grew by 15% year on year in the first quarter of 2017. Underpinned by ‘ongoing robust growth in services sector’, China is expected to increase the number of domestic routes being flown by 6%, and the flight frequency on those routes by 3%.

While Russia posted the second fastest domestic growth of 14.8% in March, the US domestic air travel market (largest in the world), has come to a standstill over the last six months.

Trends in international passenger traffic (March 2017) reported the highest growth for Latin American airlines, as a result of robust international demand within South America. The second fastest growth rate in international air traffic was posted by airlines based in Asia Pacific.

The Dollar Business Bureau - May 05, 2017 12:00 IST