India’s sick airlines have removed capacity or aircraft seats from the market faster than the speed at which their successful competitors have added them, forcing passengers to pay higher airfares this summer.
In January 2019, months before Jet Airways downed shutters, the total passenger carrying capacity of major Indian airlines on domestic routes was 1,378 crore available seat kilometres (ASKs), according to data compiled by the aviation regulator, the Directorate General of Civil Aviation. Four years later, in January 2023, this figure stood at 1,311 crore ASKs, a 4.8% decline in capacity.
The passenger carrying capacity of an airline is measured in ASKs, and not by aircraft, as there could be variations in the size of aircrafts as well as in their seating configurations.
More sick airlines
Between 2019 and 2023, IndiGo added 104 planes to its earlier strength of 204 (December 2019), and the country saw the emergence of a new airline in Akasa Air, which has fast grown to a 19-aircraft fleet over a period of nine months.
But despite these positives, India’s financially ailing airlines have pulled the sector down into degrowth. While IndiGo’s consistent expansion since 2019 more than made up for the removal of capacity due to Jet Airways shutting down — IndiGo added 172 crore ASKs between 2019 and 2023, while Jet removed 163 crore ASKs — the suspension of operations by Go First in May created a vacuum of 121 crore ASKs, about 75% of that left by Jet four years ago, according to DGCA data.
The teetering SpiceJet — whose inability to make timely payments to its vendors earned it the DGCA’s censure last year because it had begun to impact passenger safety and aircraft maintenance, and more recently saw a lessor move court for its insolvency over unpaid lease rentals — has seen a staggering 40% decline in its capacity between January 2019 and 2023. The airline has 65 aircraft in its fleet, out of which 31 are grounded.
Surprisingly, Air India, too has seen a 16% decline in the aircraft capacity deployed on domestic routes. Though the reason for this is not clear as many of its grounded planes have been made airworthy post-privatisation, it could be in part because of the enhancement of seats on international routes. A query sent to Air India remained unanswered till the time of going to press.
High passenger demand
This capacity shortfall is among the key reasons why the peak travel season has seen passengers dig deep into their pockets to afford air travel. In May, for example, airfares booked 24 hours in advance were up to five times higher than those booked for travel in April within the same booking window. Fares booked 15 days in advance in May were also upto 30% higher than in April.
The decline in capacity is partly due to supply chain issues, which have resulted in late delivery of engines and spare parts, as a result of which nearly 130 aircraft with various airlines are grounded. However, stronger airlines such as IndiGo have powered through and continued to take delivery of new planes and extended the leases of older planes to be capacity positive. The passenger demand, which had taken a hit during COVID-19, has now returned to pre-pandemic levels, putting added pressure on the reduced capacity.
However, all is not doom and gloom for the aviation sector and there is a reversal expected in the second half of this year. CAPA’s Kapil Kaul says, “The capacity crunch in the market may ease from the second half of 2023, as Air India and IndiGo are expected to add 100 new planes altogether and will see their grounded fleet return to service. Go First’s resumption of operations with a smaller fleet could also improve the situation.”
But on the whole, the aviation sector’s growth will be propelled by IndiGo and Air India who have altogether placed an order of 970 aircraft this year and enjoy 85% of the market share.