Airlines struggle as traffic nosedives

NEW DELHI: For the first time since the 9/11 US terror attack in 2001, air traffic in India is headed for a yearly decline. Several years of boom are finally giving way to a fall in aggregate traffic in 2008, if market indications are anything to go by.

According to industry experts, with air traffic expected to fall by up to 15%, the January-March quarter could be the worst for airlines. That would put overall growth during this year into negative territory. Till September 2008, air traffic grew 0.7% with 31.5 million passengers being flown. ���The fourth quarter of the current year will be the worst negative in terms of demand. Air traffic may dip 8-10% during the October-December period.

The sharp fall in oil prices has definitely been a saviour for airlines, but the severe fall in demand has offset the benefit,��� Kapil Kaul, country head of Centre for Asia Pacific Aviation (Capa), said. ���Our estimate is that oil prices would have to fall at least by another 20% to really have an immediate impact on the sector.���

Hit by high aviation turbine fuel (ATF) prices and a meltdown in the financial sector, domestic air traffic declined 18% in September this year, the fourth consecutive month of drop since June. Domestic carriers, which together lost nearly $1 billion in 2007, are expected to double the loss figure this year, mainly on account of high jet fuel prices, excess capacity, predatory pricing and underutilisation of resources.

���Airlines cut capacity by about 17% in the first half. They are expected to return at least 20 more aircraft, including Boeing 777s, to the lessors in the remainder of this calendar year,��� an industry watcher said. Kingfisher Airlines and Jet Airways ��� two of the largest private carriers in the country ��� last month announced an operational alliance for cross-selling of seats, common ground handling and code-sharing. The two carriers expect to save nearly Rs 1,500 crore through the partnership.