Domestic air travel rises 24%

Propelled by peak season demand and low airfares due to intense rivalry, domestic air passenger traffic beat the note ban blues and reported a robust 24 per cent YoY growth.

However, the yields of the airlines were affected despite a healthy domestic passenger load factor performance (88.7 per cent) in Dec. 2016 and 83.9 per cent in 9 months of FY17, as they had to go in for sizable fleet expansion while the newer airlines had to scale up their operations.

The rate of capacity addition (measured in available seat kilometersASKMs) on domestic routes was 20.6 per cent for nine months FY17.

International routes were however impacted slightly, with growth of 7.7 per cent YoY during the month because of the comparatively weaker branding position of Indian carriers.

It was however better than the industry, with 16.1 per cent growth in traffic. Domestic passenger traffic growth was 22.9 per cent during FY17.

The profitability of the airlines has been further impacted by the increasing cost of fuel prices and this has been reflected in the decline in profitability of the listed airlines in Q3 FY17.

As per Icra estimates, the fuel cost per ASKM of the domestic aviation industry increased to `1.08 in Dec. 2016 from `0.82 in Feb. 2016 and the same is expected to increase further in Q4 FY17.