The domestic passenger traffic had seen an upward trend between July 2013 and March 2019, after witnessing year-on-year de-growth in June 2013, the rating agency said in the note on Thursday.
The moderation in capacity, which started in February when the now-defunct Jet Airways began grounding its fleet in a staggered manner and, which eventually led to stalling of operations around mid-last month, has also resulted in an increase of 30-40 per cent in airfares in March compared to September last year, Icra said.
ICRA added that this (de-growth in domestic passenger traffic) is primarily attributable to adverse impact on the industry capacity which has been hit hard due to the grounding of Jet Airways aircraft starting February (due to liquidity constraints) and eventual discontinuation of its operations from April 18.
Noting that the consequent increase in airfares due to the demand-supply imbalance has impacted the industry passenger load factors (PLFs), ICRA said that in April all airlines except GoAir have reported a year-on-year decline in PLFs.
Overall, the domestic passenger traffic growth for January-April period has been at 2.5 per cent, significantly lower than the 24.6 per cent growth witnessed during the year-ago period, Icra stated.
The discontinuation of operations by Jet Airways has affected around 14 per cent of the total industry capacity. Overall, the moderation in capacity starting February has resulted in airfares surging by about 30-40 per cent in March over September last year, Vice president and co-head for corporate sector ratings at Icra said.
India, being a high price-sensitive market, has affected the passenger traffic growth from October last year onwards, Shah said.
There has been re-deployment of some of the aircraft of Jet Airways by the other airlines, which has moderated airfares during April and May 2019, overall the fares continue to increase, she added.
While increasing airfares may support the profitability of the airlines in an environment of high costs, the impact on the passenger growth does not bode well for the industry, Shah noted.
