According to a recent release by Credit Rating Agency ICRA, the Indian aviation industry is witnessing a de-growth. This is primarily due to the demand-supply imbalance caused by grounding and eventual discontinuation of Jet Airways.

The report says after six years of monthly year-on-year (Y-o-Y) growth, the domestic passenger traffic has witnessed the first Y-o-Y de-growth of 4.2 per cent in April 2019. As per ICRA note, all airlines, except GoAir, have reported a Y-o-Y decline in passenger load factors (PLF). The overall domestic passenger traffic growth for January 2019 to April 2019 is 2.5 per cent, which is significantly lower than the 24.6 per cent growth witnessed during January 2018 to April 2018 period.

Elaborating further on this, Kinjal Shah, vice president and co-head, corporate sector ratings, ICRA, says, β€œThe discontinuation of operations by Jet Airways has impacted ~14 per cent of the total industry capacity. Overall, the moderation in capacity starting February 2019 has resulted in increased airfares – ~30-40 per cent increase over September 2018 to March 2019 – and more inconvenience to the passengers.

“India, being a high price sensitive market, it has affected the passenger traffic growth from October 2018 onwards. While there has been redeployment of some of the aircraft of Jet Airways by the other airlines and thus some moderation in the airfares during April 2019 and May 2019, overall they continue to be high.”

The last monthly Y-o-Y de-growth in the domestic passenger traffic was witnessed in June 2013.

Natasha Nitturkar