Rising airfares, lesser flights & revenue at airports reasons say experts

New Delhi: Growth of air traffic in India has hit a 5-year low in the financial year 2019. According to an ICRA report, air traffic growth was recorded at a low of 11.6 % in 2019 whereas cargo traffic growth remained moderate at 6% in the same period.

ICRA is an investor service company of international credit rating agency Moody’s. The latest ICRA report noted that the pace of air traffic growth declined by around 3.9 % in the March quarter against a healthy score of 14.9 % in the first three quarters of the fiscal year 2019. Growth in cargo traffic was also moderate against double-digits growth recorded in the past two years.  The weak growth figures are not in favour of the already troubled aviation sector, said, experts.

The report shows domestic passenger traffic weakened by 1.1 % in March. Concerning figures of 1 per cent dip in international aircraft movement in addition to the flat movement of domestic flight has also been reported. In all the overall aviation traffic has witnessed a trough of 0.1% in the country.

Said as a “de-growth” March 19, the situation has been first reported since February 2013. Four major airports have reported a steep decline in passenger traffic movement in March. The decline in passenger traffic follows the increase in airfares due to the lower number of flights owing to multiple issues.

Passenger traffic in Delhi and Mumbai airports declined 9.4 per cent and 16.2 per cent, respectively. Similarly, Chennai saw a 7.4 per cent de-growth and Kochi declined by 11.3 per cent in March. However, Bengaluru, Hyderabad, Ahmedabad, Guwahati, and Goa have maintained growth momentum, but overall, the metros airports are showing a decline.

“After years of strong growth, air traffic growth has hit a low with passenger traffic declining by 1.1 percent in March. This has dragged down the full year passenger traffic growth to 11.6 percent, making it the lowest in the past five years,” ICRA said.

Between FY15 and FY18, the air traffic grew an annualized rate of 17.5 per cent. But this has been arrested of FY19. “This can impact revenue and margin of airports at a time when many of them are undertaking large capex,” said Harsh Jagnani of ICRA.

According to the agency, cargo traffic growth also moderated to 6 per cent in FY19, as against double-digits growth witnessed over the past two years.

The slowdown was primarily driven by the international cargo segment, which accounts for 62 percent of the total cargo traffic, and grew only 2.6 percent in FY19 as against 15.6 percent in FY18.

On the other hand, domestic cargo traffic had a robust growth of 12 percent in FY19 up from 8.1 percent in FY18.