Domestic air traffic in India dropped by a sharp 9.1% in February compared to a year ago, the latest figures released by the International Air Transport Association (IATA) have revealed.
“In addition to the slowing economy, Indian airlines have been reducing capacity from the earlier unsustainable levels. Capacity declined by 7.5% in February and load factor slipped to 74.5%,” IATA, which represents 240 airlines comprising 84% of global air traffic, said.
The slump in the Indian market is in contrast to the growth in other emerging markets.
“China’s domestic traffic soared 20.2% compared to a year ago, reflecting the impact of New Year-related travel and the continuing acceleration of the economy. With capacity up 13.7%, load factor jumped 4.5% points to 83.8% — the highest for any domestic market. From January, traffic was up 5.3%,” the airline association said.
Overall, domestic markets climbed by 3.9% in February compared to a year-ago, driven primarily by surging demand in China and Australia.
On March 20, IATA had raised its outlook for the industry’s earnings margin to 1.6% net profit, from 1.3%.
“The industry's fortunes appear to be moving in the right direction. But the margins are wafer thin. And any shock — the continuing euro zone crisis or budget sequestration in the US — could negatively impact the outlook,” said said Tony Tyler, IATA director general and CEO.
“It’s unfair that air travelers should suffer the impact of sequestration given that airlines and passengers already pay around $4.5 billion a year in fees and taxes for the essential services of border control and airport security. Aviation is an important catalyst for economic growth and prosperity. The government's priority should be on extracting the greatest economic benefit possible from aviation-not making it more difficult to do business,” he said.