homeaviation NewsAirfare situation may improve in H2 FY24 as grounded aircrafts return to service: CAPA
Airfare situation may improve in H2 FY24 as grounded aircrafts return to service: CAPA
The aviation sector has been continuously riddled with airlines facing massive financial troubles one after the other. In the last one decade three airlines including Kingfisher, Jet Airways and now Go First have been grounded. Another carrier SpiceJet is also facing several headwinds.
The aviation sector has been continuously riddled with airlines facing massive financial troubles one after the other. In the last decade, three airlines including Kingfisher, Jet Airways, and now Go First have been grounded. Another carrier SpiceJet is also facing several headwinds.
While airlines are shutting down, India's air passenger traffic is continuously rising creating a demand-supply imbalance. After Go First suspended operations, airfares have been hitting roofs, especially on routes that Go First operated.
Speaking to CNBC-TV18, Kapil Kaul, CEO of South Asia at CAPA said the aviation industry is currently facing a shortage of approximately 125 aircraft compared to pre-COVID levels.
If we consider the projected demand for the fiscal year 2024, this shortage could exceed 175 aircraft. Such a significant gap between supply and demand inevitably leads to fare increases, he said.
Kaul added that passengers traveling to certain markets, such as Mumbai, Ahmedabad, Leh, and Srinagar, may experience a more noticeable impact due to the recent operational shutdown of GoAir. However, the overall network impact is expected to be relatively limited since the airline had already reduced its fleet gradually before ceasing operations.
However, according to Kaul, the situation is likely to improve in the second half of the fiscal year as grounded aircrafts are expected to return to service, and new aircraft deliveries are scheduled to commence during this period.
Kaul highlighted that the recent challenges faced by GoAir have left the lessors community concerned.
He added that while airlines with strong creditworthiness, such as Air India, IndiGo, and Akasa, are not expected to face significant hurdles, struggling airlines and new startups may encounter difficulties.
According to Kaul lease rates for these airlines are likely to rise, and lessors may impose more stringent terms and conditions.
Watch the video for the entire discussion.
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