The Economic Slowdown Has Hit The Aviation Sector

The economic slowdown has hit the aviation sector in just one quarter , its fortunes have gone from the best to worst low cost carrier,  IndiGo has posted a net loos of 1,062 crore rupees in the July to September period,  IndiGo controls 48.2% of the market, the revival of the sector is beginning to reverse main reason for a prolonged slowdown in the aviation industry ATF (aviation turbine fuel)prices are rising rupee is depreciating and benefits from jet airways grounding have stopped.

Between Jan and Oct , the price of ATF sold by Indian oil corp in Delhi , rose over 9%to reach 63295 per kiloliter ATf  is 30 35% of the overall cost of an air line the volatility in the rupee dollar exchange rate is bad news too it impacts crude oil prices the Directorate General of Civil Aviation (DGCA) shows that domestic air passenger growth was just 3.15% from January to October of 2019.

The airlines have been candid about gains from jets grounding but the biggest worry is the slowdown it is affecting both leisure and business travel an average corporate traveler takes 150-200 flights a year this has come down as the focus is to plan in advance and defer travel this affected the airlines ability to increase yields airlines maximize yields from passengers who book in the 0-15 day window the demand slowdown has put pressure on fares even this booking window moreover , revenues in the festive season remained subdued .

The air passengers numbers over the one year are weak the nine month passengers growth Jan to Sep stood 3.01% this is the lowest growth and heading for its worst year in the past six years aviation sector also dealing with overcapacity that pulled down fares and pumped up the air travel for a host of factors will have to come together The economy needs to improve first there is need fro liquidity High value transactions need to pick up.

The fortunes of the aviation sector have gone from best to worst. The second quarter earnings of India’s largest carrier, IndiGo, have come has a shock along with that of other carriers which are equally disappointing Jet Airways is a result of the slower growth says Aviation experts, it has reduced capacity on international routes People are not buying consumer goods,not buying cars.

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