Air India

India domestic passenger growth slows to 8% in Dec-2011; 2012 growth to slow from 16.6% in 2011

India’s domestic air passenger growth slowed to 8% in Dec-2011 to less than half the pace of growth experienced in calendar 2011 and down from the 17-22% growth rates seen between Jun-2011 and Oct-2011. While passenger numbers in India’s domestic market have seen growth now for 31 consecutive months, the result for Dec-2011 marks the end of 16 consecutive months of double-digit growth. This single-digit growth in the peak month of Dec-2011 (to 5.63 million passengers) is a sign that slowing economic growth is affecting air travel and reflects impending capacity caution by some of the nation’s largest players.

India’s domestic passenger numbers increased 16.6% to 60.7 million passengers in 2011, averaging out at 5.1 million passengers per month, and up 74% from 2006 levels. The largest stand-alone carrier was IndiGo with a 19.5% market share, with IndiGo also the fastest growing carrier in 2011.

Non-stop US-India market continues to shrink with American Airlines ending Chicago-Delhi service

The number of carriers operating direct service between the US and India will decline to two – Air India and United – from 01-Mar-2012 when American Airlines ends its sole service to India, a daily service between Chicago O'Hare-New Delhi. The cancellation of the unprofitable routes comes as American rationalises its network as part of its bankruptcy filing. The carrier stated that the service is being cancelled due to the “historical financial performance of the route and its future outlook given the global economic climate and high oil prices.” The poor financial performance on the route, American's longest at 7484 miles, relates to the impact on yields of competitive pricing as American was able to consistently report high load factors on the route over the past 12 months. 

Outlook 2012: India’s loss-making aviation sector facing its most critical phase in almost a decade

Indian aviation enters 2012 facing its most critical challenges since the advent of the 2004 industry reforms. The paradox of India’s airline sector is that it serves one of the world’s fastest growing economies and is posting double-digit traffic growth, yet CAPA estimates Indian carriers combined will lose USD2.5 billion in the 12 months ending 31-Mar-2012. This is on total revenues of just under USD10 billion – a worse result even than in FY2008/09, when traffic was declining and fuel prices spiked at USD150/barrel. In the domestic market, India’s airlines lose USD25-30 every time a passenger boards an aircraft. This situation has prompted unprecedented intervention by the Prime Minister, who has outlined a 12 point agenda upon which the Ministry of Civil Aviation must report every month.

TO ORDER the CAPA India Aviation Outlook 2012, which will be released on 15-Jan-2012, please download the order form attached top left or for more information contact Shuchita Gupta on sg@centreforaviation.com or +91 11 2341 4440. The form outlines special discounts for CAPA Members.