Domestic air passenger traffic expected to climb this year: Cleartrip Senior Vice-President

India’s domestic air passenger traffic growth, which had witnessed a slump on the back of the grounding of Jet Airways and the general slowdown in the economy, is expected to pick up this year.

According to Balu Ramachandran, Senior Vice-President, Cleartrip, if the divestment of Air India goes through this year, then it would bring about higher capacity addition, thereby leading to “robust” growth in passenger traffic.

“We had a fairly catastrophic event this year with Jet Airways going down, and subsequent to that the overall capacity addition in the Indian market by all domestic carriers came down to about 4-5 per cent during the April-October period. This is in stark contrast to the growth of 18-20 per cent in the same period last year,” Ramachandran told BusinessLine .

The drop in capacity addition led to a decline in passenger growth numbers, which came down to 2-3 per cent in 2019, against a growth of 16-18 per cent in 2018. The drop in capacity addition also led to an increase in fares which went up by nearly 8 per cent on year-on-year basis. The higher fares also impacted consumer demand to some extent.

“If the government is able to divest Air India, then I think we should have net capacity addition of upwards of 15 per cent. If that happens, we will see robust growth figures for Indian domestic travel as well,” he said.

However, the extent of growth in passenger traffic will depend on the overall growth of the economy and ticket fares. Assuming that capacity addition grows by 15 per cent this year, fares do not show significant rise, and economic growth picks up, then the passenger traffic growth would be upwards of 10 per cent, he said.

Business growth opportunities

Online travel portal Cleartrip, which has witnessed close to 15 per cent growth in the number of effective transactions in India so far this fiscal, is expecting to register 20-25 per cent growth in FY21.

Currently, the company is present in eight markets across India and the Middle East, and is looking to expand its footprint in Africa, Turkey and parts of Europe over the next few years. Cleartrip clocks gross booking value of around $1.5 billion annually. Nearly 50 per cent of this comes from its India operations and the remaining 50 per cent from the Middle East.

“We have a significantly high market share in the Middle East. Air traffic in those markets is registering single-digit growth, and that is because online commerce is evolving at a pace which is slightly behind India. However, there is a large shift happening from offline to online and we have witnessed over 35 per cent growth in those markets,” he said.

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