Worst July For Air Passenger Traffic In At Least Six Years

Air passenger growth slowed in July amid a prolonged slowdown in the economy.

The number of passengers flying Indian airlines grew at 3 percent year-on-year last month, the worst pace in July in at least six years, according to BloombergQuint’s calculations based on the data from Directorate General of Civil Aviation. That compares with the 18 percent monthly average passenger growth in the last five years. Nearly 1.19 crore Indians took to the skies in July this year, the data showed.

While the overall passenger growth is in single digit, yields—a measure of average fare per passenger per kilometer—too, have come down to last year levels, according to Santosh Hiredesai, research analyst at SBICAP Securities. “This means that there is some slowdown in the sector. Generally, lower yields should be complemented by higher passenger growth rate or vice versa to suggest that the sector is growing well.”

SpiceJet Ltd. continued to report faster passenger growth that market leader InterGlobe Aviation Ltd. for the third straight month. Also, smaller airlines grew faster than larger peers in July.

Here’s how the year-on-year passenger growth of major Indian airlines fared in July...

• The number of passengers flying IndiGo grew at the slowest pace in five months at 17 percent.
• SpiceJet’s passenger growth stood at 29 percent.
• Passenger growth of Air India stood at 3.4 percent—the slowest in three months.
• GoAir’s passenger growth stood at 29 percent.
• AirAsia’s air passenger growth stood at 38 percent—the highest in eight months.
• Passenger growth of Vistara stood at 29 percent—the highest in nearly two years.

Also, there’s a silver lining. Lower fuel cost is expected to offset the slower passenger growth and falling airfares. Prices of jet fuel—which accounts for more than a third of airlines’ operating cost—fell about 9 percent over the last year so far in the ongoing second quarter.

Passenger load factor—the percentage of seats filled or a measure of capacity utilisation—fell for all major airlines in India over last month as fewer Indians flew. InterGlobe Aviation, the operator of the nation’s largest airline IndiGo, flew most empty seats among peers in July. Seat occupancy of SpiceJet fell the most in six months. Still, India’s second-largest airline managed to report a load factor of more than 90 percent for over four years.

Here’s how the sequential passenger load factor of major Indian airlines fared in July...

• IndiGo’s passenger load factor declined 390 basis points to 86.2 percent—the biggest drop in 11 months.
• Passenger load factor of SpiceJet fell 130 basis points to 92.4 percent.
• AirAsia’s passenger load factor declined 120 basis points to 89.5 percent.
• Passenger load factor of Vistara—controlled by Tata Group—fell 90 basis points to 82.4 percent.
• Wadia Group-controlled GoAir’s passenger load factor declined 360 basis points to 90.4 percent.
• Air India’s passenger load factor fell 150 basis points to 79.7 percent.

AirAsia and Vistara were the only two airlines that managed to gain market share from larger peers like Air India, IndiGo and SpiceJet. The aggregate market share of AirAsia and Vistara increased 70 basis points over the last month to 12.5 percent in July.