High airfares to hit passenger traffic growth, claims ratings agency Fitch

Mumbai: Ratings agency Fitch on Friday said that a capacity constraint led increase in airfares will dent passenger traffic growth. According to Fitch, the Indian aviation market has seen a sharp increase in airfares in the last few months due to tight supply, which has been worsened by the suspension of the 737 MAX aircraft.

“Fitch expects the growth in revenue passenger kilometres (RPK), which decelerated to 12.4 per cent in January (2018: 19.9 per cent), to weaken further until supply increases,” the rating agency said in a note.

The air passenger volume is measured in RPK.

As per the note, Jet Airways, which along with its subsidiary JetLite had the second-largest share of the domestic market until January, has been steadily losing market share as it has been forced to shrink its operating fleet due to financial troubles.

“Market leader IndiGo cancelled around 30 flights per day (2 per cent of total) from around the middle of February until March, with industry participants highlighting pilot shortage as a key reason,” the note said.

“SpiceJet was then forced to ground its 737 MAX jets, which form around 15 per cent of its fleet.”