Airlines carry more passengers but earn less

Airlines have started to come out of the dive that they started in November 2008, when they flew 3 million passengers, compared with 4.1 million in May of that year.

In June 2009 they carried almost 3.7 million passengers, and in July they carried marginally fewer passengers at 3.6 million. Good news? Not quite, because they are making less money per seat they sell than they were in 2008. This is the effect of the shift towards the low-cost model — sell more seats but earn less per seat.

The latest data collated by the Directorate-General of Civil Aviation show that during July this year the airlines flew 35.97 lakhs passengers or almost 3.6 million, registering a growth of 18 per cent compared with the same period in the previous year.

Yields become casualty
“The airlines are filling their planes but most of the capacity is turning low-cost. This is leading to a situation where airline yields are becoming a casualty,” said Mr Kapil Kaul, CEO, Indian sub-continent & Middle East, Centre for Asia Pacific Aviation. The Chief Executive Officer of a full service airline also confirmed that the yields were not in “the right zone”.

To overcome this situation, Jet Airways has indicated that by October this year close to two-thirds of the total capacity offered will be on Jet Konnect, the low-cost sub-brand launched in May. Kingfisher has also started operating more flights on its low-cost variant Red, while State-owned Air India is to launch low-cost operations in the domestic market with Air India Express next month.

In July this year, the highest increase in passenger carriage for a stand alone airline was shown by the Mumbai-based low-cost airline Go Air which carried 2.04 lakh passengers, up from 75,000 in July last year. Kingfisher Airlines, which does not give a break-up of number of passengers flown by its 100-per cent subsidiary Red, carried 8.29 lakh, up from 4.69 lakh passengers. In July last year, Kingfisher and Air Deccan were operating as separate entities. But later Kingfisher Airlines purchased Air Deccan and renamed it Kingfisher Red.

NACIL (Domestic), JetLite, SpiceJet, Paramount and IndiGo all flew more passengers during July this year compared with the same period in the previous year.

Positive impact
“Our passenger growth has far exceeded the drop in yield. We are seeing a strong positive impact on the top line. The launch of Jet Konnect has helped us record seat factors of upwards of 75 per cent,” the Chief Commercial Officer, Jet Konnect, Mr Sudheer Raghavan, said.

Source: The Hindu Business Line