Crunch in seat capacity behind high domestic air fares

Air passengers India has a fleet of around 422 aircraft for a population of 1.2 billion. (Reuters)

A year after Kingfisher Airlines discontinued operations, the combined capacity of all airlines in India has barely recovered to 2,30,000 seats, still 10,000 adrift of the number offered when Vijay Mallya's airline was in operation.

The low pace of expansion of capacity by the airlines even in a year when the domestic passenger demand has risen an anemic 6 per cent is the reason for the high fares in the industry.

"Currently, average fares in the domestic sector are about 25 per cent higher than last year. We would see fares in the domestic sector rationalising, if airlines increase capacity (more). An aggressive capacity addition by the airlines would have offset up to 10 percentage points hike in fares," said Sharad Dhall, president at Yatra.com, an online travel portal.

It is this shortage that eggs India based airlines to announce plans to buy or lease aircraft continuously with a target till 2024. The airlines need to ramp up their capacity to 1 million domestic seats a day which is four times more than the current 2,30,000 seats a day they are offering.

But industry sources said the industry can keep up its growth momentum only if it keeps up a delicate balance between adding capacity to keep fares low and yet keep the rates high enough to break even.

Airlines agree that the capacity addition by them in the recent years has not kept pace with the rise in demand.

"Our carriers need to increase the daily seat offering to one millions seats by 2016 to get the aviation sector going in the country. A couple of new players have announced plans to launch airlines in the country. I hope they add capacity aggressively," said Keyur Joshi, co-founder and chief operating officer of MakemyTrip.com, India's largest online travel portal.

... contd.

Please read our terms of use before posting comments
TERMS OF USE: The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).
comments powered by Disqus