Home > Aviation > India August Domestic Air Passenger Growth Highest Globally

India August Domestic Air Passenger Growth Highest Globally

“The industry has shifted gears downward. The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace. With business and consumer confidence continuing to slump globally, there is not a lot of optimism for improved conditions anytime soon,” said Tony Tyler, IATA director-general and chief executive officer. (www.iata.org)

Excerpts of The IATA ReleaseLatest data released by International Air Transport Association show global traffic movement in August has slowed down. It is also indicative of tough times ahead for the airline industry. Contracting traffic movement and rising costs will result in sharp contraction in profits of the industry.

Freight movement is one of the factors that marginally reflects economic growth. Freight movement fell to 3.8% in August from 1.8% drop in July. Poor demand indicates that either volume of global trade has contracted or goods are being transported via other means.

Total demand for passenger services grew 4.5% in August from last year. This is slow compared with year-on-year 6% growth recorded in July.

A look at the break-up of international passengers indicates that traffic was up 6.2% in August compared with the year-ago level. However, international passenger traffic fell 1.8% when compared with the previous month.

  • European airlines achieved the strongest growth in August with international passenger traffic growing 7.9% year-on-year. While leisure travel was weak, higher business travel drove growth in the region.
  • The weakest performance was registered by the North American carriers. A low year-on-year growth of 2.9% was registered in August. Capacity also grew at a slower pace. 
  • Demand from Asia-Pacific, one of the fastest growth regions slowed to 5.3%.

Domestic Passenger Traffic

In January-August, domestic passenger traffic rose 3.6% compared with a year ago.

  • India recorded the world’s highest growth of 19.7% in domestic passenger traffic movement. It was followed by Brazil.
  • Japan continued to record the steepest decline of 12.4%.
  • Chinese domestic travel demand slowed to 2.8% from double-digit growth in the past few years.

It must be noted that domestic travel accounts for about 65% of operations for the North American airlines. Hence, a weak 0.9% growth drags overall performance of the airlines in the region.

While data show India is the fastest growing country in terms of domestic passenger traffic, pressure on the industry’s financials is expected to continue. Airline companies in India will suffer loss in July-September 2011. Robust growth in revenues is likely to get eroded by the rising operating costs and high interest burden. Also, international traffic movement is contracting, which will adversely affect full-service airlines operating outside India.

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