Air Passenger Traffic Grows The Fastest In 13 Months

Domestic airline passenger traffic rose at its fastest pace in 13 months in February, usually a lean month, as more than 10.7 million Indians took to the skies.

Passenger traffic grew 24 percent over the year-ago period, according to data released by the Directorate General of Civil Aviation, on the back of improving affordability, low penetration and favourable government policies.

The growth in passenger traffic in the world's fastest-growing aviation market was led by GoAir, IndiGo, Air Asia and Vistara. All the four airlines' traffic rose above the industry average. The number of fliers for InterGlobe Aviation Ltd., the parent of IndiGo, rose for the second straight month after sluggish growth in the second half of 2017.

Passenger load factor, a measure of capacity utilisation, increased for all major airlines in February. Five companies reported a 90-percent plus average for the first time in at least four years.

SpiceJet's passenger load factor rose to its highest level of 96.3 percent, remaining above 90 percent for the thirty-fourth consecutive month. IndiGo's was near its three-year high, while the Jet Group companies reported a 90 percent capacity utilisation for the first time.

IndiGo, India's largest airline, continued to consolidate its market share by gaining 40 basis points. Among the smaller operators, GoAir, Air Asia and Vistara continued to gain market share at the cost of larger peers.

IndiGo could lose market share in March as it cancelled flights after the regulator grounded Airbus A320 Neo planes due to technical glitches in their Pratt & Whitney engines. The decision came after IndiGo's A320neo aircraft suffered engine failure mid-air and was forced to make an emergency landing.

Also Read: India Grounds Airbus A320neo Planes With New Pratt Engines Citing Safety Concerns

IndiGo's loss is likely to result in gains for Air India Ltd., Jet Airways Ltd. and a few smaller operators which are running at lower capacity. SpiceJet Ltd., IndiGo's closest competitor, is unlikely to benefit as it is already running at high capacity utilisation.

In February, IndiGo's domestic flight cancellations stayed above the industry average due to its engine problems. This is expected to persist in March as well as the company cancelled more than 900 flights. Flight cancellations had last spiked in June 2017, also due to engine problems.

Which means, IndiGo also lost its top position in on-time performance to SpiceJet for the second time in four months.

Engine troubles have circled IndiGo in the month of March, which could result into a market share loss and restricted passenger growth for India's largest airline company. IndiGo's loss is likely to result in gains for Air India Ltd., Jet Airways Ltd. and a few smaller operators which are running at lower capacity utilisation. SpiceJet Ltd., the closest competitor of IndiGo is less likely to benefit as it is already running at high capacity utilisation.