Domestic air travel rebounds in India

Domestic air travel in India registered an increase in August with 3.7 million passengers flying compared to the 2.9 million in the corresponding period of the previous year, according to data from the country's Ministry of Civil Aviation.

While air travel had slumped in India from September 2008 onwards after the international financial crisis broke out, the signs of a revival are now clear, said analysts. The reversal was first noticed in June, which recorded better-than-expected figures. By August, signalling an upturn in the economy, passenger figures were higher than the corresponding period of the previous year.

"An improvement in the economic outlook is likely to translate into higher business and leisure travel," Sudhir K Nair, head of India-based Crisil Research, told Emirates Business. "Passenger traffic is expected to revive further, driven largely by declining ticket prices, which is important to attract price elastic customers."

The number of passengers travelling by air has been going up since June, which registered an increase of 5.66 per cent compared to the corresponding period of the previous year, and July, which showed an increase of 21.3 per cent.

Indian carriers flew 28.4 million passengers on domestic sectors from January to August 2009, compared to 28.9 million during the same period in the previous year, a decline of 1.83 per cent, according to data from the Ministry of Civil Aviation. During this period, Kingfisher Airlines registered a market share of 22.6 per cent, while Jet Airways and its subsidiary Jet Lite stood at 26.4 per cent. Both Kingfisher and Jet Airways operate flights to Dubai. In addition, Jet Airways operates two flights to Abu Dhabi and one to Sharjah.

Kingfisher, which started operations to Dubai in June this year, plans to connect the UAE to a number of cities in India during the course of the year, said Siva Ramachandran, the airlines' Vice-President for Global Sales.

A daily Bangalore-Dubai service later this month would be followed by a direct flight from Bangalore to Abu Dhabi soon after, said Ramachandran. The airline was evaluating options for connecting Dubai with at least three more Indian cities – Delhi, Trivandrum and Hyderabad – despite the crisis, he added.

"All these services to Dubai will start this year itself. We may also look to connect Trivandrum with Abu Dhabi following that. Regarding expansions within the Middle East, Kingfisher is weighing its options for launching flights to Saudi Arabia and Kuwait this year," said Ramachandran. "It is possible that we will start flights to Riyadh in Saudi Arabia and Kuwait this year itself, as part of our expansion plan for the Middle East."

He said the second phase of the airline's expansion in the Middle East will include services to "Doha, Bahrain and Muscat".

Senior executives of Indian carriers based in Dubai said the Gulf routes were very profitable overall. The revival in the Indian economy would also translate into more business and leisure travel to the Gulf. Airline executives said they expected yields to go up once demand peaked. Fares were currently very competitive, they added.

Of the 70 international carriers operating to and from India, Emirates and other Gulf carriers such as Etihad, Qatar Airways and Gulf Air have a major share on the Gulf routes. Emirates, the major airline on the Gulf-India route, plans to increase the number of its flights to 184 weekly from the current 166. The airline flies to 10 Indian destinations.

"We will expand our capacity in a phased manner with the addition of nine weekly flights in October and an additional nine weekly flights in December," said Majid Al Mualla, Emirates' Vice-President for Commercial Operations, West Asia and Indian Ocean.

He said Emirates was expanding operations to Tri?vandrum with an increase of three flights in October and one flight in December. Kolkata will see an increase of five flights in December, Kozhikode will have an increase of three flights in October and two flights in December, while Chennai will have an extra flight in October and one in December.

Emirates operates at a load factor of about 75 per cent across all 10 destinations it flies to in India, Al Mualla said. He added the decision for expansion was made possible by the bilateral agreements between the UAE and Indian Governments.

Talking about the profitability of Indian carriers, Crisil's Nair said the financials of most large Indian carriers were very weak, as a result of which the carriers needed to raise equity to improve their capital structures. "Also, the carriers need to adopt a much leaner structure, which will enable them to operate profitability even at lower yields [ticket prices], as the demand at higher ticket prices falls significantly in the price sensitive Indian market," he said.

A recent strike by pilots of Jet Airways crippled the airline's operations and the estimated loss was in the region of $40 million (Dh147m), reports said.

Nair said: "Even though there has been a temporary dent in the image of Indian aviation, we do not expect it to have any significant medium or long-term impact. With the improvement in operational efficiency of carriers, improvement in airport infrastructure, the quality of service and on-time performance of carriers is expected to improve."

Airline executives have pointed out that the new data from the International Air Transport Authority shows the region's economy has started reviving. This will result in more travel, they said.

Online Tourism

The online tourism market in the Asia Pacific (Apac) region is expected to show a 17 per cent gain in leisure and unmanaged business travel, a travel industry research authority said.

The Apac region is expected to grow at double-digit rates as technology adoption soars in markets such as China, Japan and Singapore. According to PhoCusWright's third edition of the Asia-Pacific Online Travel Overview, the online travel agency expansion continues to impact markets such as India, Australia and New Zealand.

These factors will contribute to a 17 per cent gain in the Apac online leisure and unmanaged business travel market, projected to reach $35.7 billion (Dh131bn) by the end of 2009.

"Compared to other regions, the Asia-Pacific travel market is relatively stable right now," said Ram Badrinathan, General Manager, PhoCusWright, Asia Pacific. "For years, the travel industry has pinpointed Asia, particularly India and China, as the next frontier for growth. The downturn in 2009 has not changed that."


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