New Delhi, Jan 7 (): Indian aviation is now facing a new problem of few passengers taking to the skies in the metro routes.
Earlier, it was the price of jet fuel that accounted for 50% of airline operating expenses. The tax on this fuel,the second highest in the World is about 25%. Bangladesh charges 27% tax on jet fuel.
The reason for passengers moving away from air travel has to do with the airline services who are taking advantage of Kingfisher Airlines being grounded and in turn rise in the prices. To fill in the vacuum created by KF’s 350-plus flights with 65 planes, the domestic airlines raised fares and from the start of this year passenger traffic has been falling.
From May onwards, the slide began with 0.87% and hovered around 3.84% -3.70% in June and August, shot up to 12.4% in September and 15.7% in October and improved with only 7.28% drop in the peak travel season of November. The figures for December would be released only by mid-January.
India rated as ninth largest aviation market witnessed a boom in traffic from 2004 with an annual growth of 18.1% between financial year 2004 and 2012. Most of this was the advent of low-cost airlines but now the airlines that are flying are now concerned about how to bring back the passengers to the airport.
Ironically, jet fuel prices cited as a reason for losses was Rs 67,319.71 per kilolitre in May is now at Rs. 66,236.20, a drop by 1.60%.
The coming months are already rated as poor traffic period.
Rupee depreciation against dollar, previous accumulated losses, steep airport taxes and servicing debt weigh on the airlines not to cut fares.
If the global oil market sent aviation fuel price up, then the airlines will have to up the fares and in turn drive out more passengers. Already many airlines are shunning the non-profit routes by not linking with small cities which in the long run can be profitable.
Aviation companies not listed in the stock markets like Indigo and Air India are garnering more share of traffic by their ticket price. Those listed are facing problem trying to balance the account books and please the stakeholders.