Circa 2015 is inching close to its culmination. But before it finally bids adieu, in all likelihood it would have proved a vital point pertaining to aviation management in the country. With right kind of pricing environment (on the input side), the performance output could well be quite dazzling in one of the fastest growing markets in the world.
The recently released domestic passenger figures by the DGCA for January- November period pegs the volume at 7.38 million marking a significant jump of an impressive 24% over the corresponding period figure last year. This has triggered the hope that the total volume of domestic passengers will cross 7.5 million level – for the first time in the history of Indian aviation. In 2014, the total domestic passenger volume had stood at 6.7 million. And, therefore, if this same growth level continues,the final domestic passenger number in 2015 could go past the 8 million mark.
The extremely bullish trend witnessed clearly is primarily on account of the steep decline in the oil prices, something that has benefited the aviation industry around the world. In India, with the existing high taxation, oil prices have constituted over 40% of the overall operational costs, as against a worldwide average of 25-25%,have always been cited as the major spanner in the growth story for aviation in India. Even as there has been no change in the taxation slabs on ATF, it is the steep decline in price that has given airlines the elbow room to keep the prices affordable.
At another level, DGCA’s latest figures also underline capacity growth and intense competition which has come into the play with the addition of two airlines in the game (Vistara and Air Asia) and a strong comeback by SpiceJet. For instance, if we look at the figures of November alone, Vistara tops the chart in the On Time Performance (OTP) list registered at four major airports – Bangalore, Delhi, Hyderabad and Mumbai. For long, this distinction has been the major USP of the market leader Indigo which has now moved to second slot. In terms of passenger loads, the top position is held by SpiceJet with over 90% (primarily being attributed to a series of flash sales it hadinitiated earlier this year). Indigo, Go Air and Air Asia have reported load factors in the range of 80-84 percent during the same month.
Global aviation body IATA has predicted 2016 to be the most profitable year for the airline business in recent history thanks to the lower oil prices. And trends in the Indian market in 2015 clearly reflect that the domestic growth story will become more formidable with the most vital input in the overall cost of airlines’ operations remaining subdued.
Going ahead,the real icing on the cake could be a decisive move from the government via its soon to be announced civil aviation policy in doing away with the existing taxation anomalies. This could well turn out to be double bonanza for domestic players who may take a shot at 100 million in 2016.
