The Hindu Business Line : Fuel price rise will not impact domestic air travel growth: KPMG

New Delhi, July 3 The domestic aviation sector will continue to grow as long as income levels rise, the buying power of the middle class remains buoyant, and the economy and gross domestic product are driven on purchasing power parity and not per capita income, consulting group KPMG has said.

In its report titled ‘Indian aviation: Flying through turbulence’, which was released here on Thursday, KPMG said that while the increasing price of aviation turbine fuel would hurt the industry, it could never be the reason for an airline to close down.

“India operates one of the youngest fleets in the world and with new and more efficient engines, airlines gain from low fuel burn and improved operations efficiency. The advantage accrued from a new aircraft fleet presents immense saving, which in turn leads to achieving break-even faster,” the report adds.

Commenting on the possible slowdown in the industry, the report points out that domestic air travel will be adversely influenced by epidemic outbreaks, economic recession, terrorism, shift in policy, regulations and competitive market, but not by rise in oil prices.

Increasing efficiency

It has been suggested to airlines to set up an “early warning mechanism” to forewarn them of low yields routes as well as identify potentially high traffic routes that may be seasonal.

The report suggested several changes and amendments that should be looked at to improve airline efficiency, including shorter distances between the terminal and the aircraft parking bays so as to lower transportation time, augmentation of additional aerobridges thereby allowing at least 70 per cent of arriving aircraft to dock at the terminal among others.

The report feels that the domestic industry can achieve break-even and even become profitable, despite rising fuel prices, as long as they focus on improving airline efficiencies, improve processes, switch to leaner business models and cost-optimise their business operations.

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