Recovery on the horizon for Indian aviation sector
Higher consumption of aviation turbine fuel (ATF) in recent months
indicates improved aircraft movement on rising passenger and freight
traffic. Indeed, ATF consumption got a boost despite price hikes due to the rupee depreciation.
There is some hope on the horizon for the Indian aviation industry . Higher consumption of aviation turbine fuel (ATF) in recent months indicates improved aircraft movement on rising passenger and freight traffic. Indeed, ATF consumption got a boost despite price hikes due to the rupee depreciation.
In the first half of the current fiscal, ATF consumption grew 4.4 per cent compared with a decline of 4.8 per cent in the same period last fiscal. In September alone, the latest month for which data is available, ATF consumption has expanded by a robust 7.3 per cent.
While there is a base effect to the current growth, it is encouraging that consumption is not falling further. The consumption of 442,000 tonnes in September 2013 is almost comparable to the 445,000 tonnes in September 2011. 2011/12 had registered an all time high ATF consumption of 5.53 million tonnes. In fact, consumption of 2.67 million tonnes in the first half of this fiscal is on par with the 2.68 million tonnes in the same period in 2011/12.
Petroleum Products Planning and Analysis Cell, the data wing of the Petroleum Ministry, attributed the rising ATF consumption to higher domestic air travel owing to lower fares charged by airlines. "High ATF uplift does indicate increasing aircraft movements. We now have to see how the peak season of November to January period pans out," says Amber Dubey, Partner and Head, Aerospace and Defence, at global consultancy KPMG.
In the last decade, ATF consumption witnessed two declines in a fiscal year. The first came in 2008/09, a result of an overall decline in industrial and economic activity because of global factors. It fell for the second time in 2012/13, owing to the closure of Kingfisher Airlines, high ATF prices and fares.
Data released by the Airports Authority of India also reveals an uptick in recent aircraft movement. It improved by 3.4 per cent in August, the latest month for which data is available, and by two per cent in July. Domestic and international passenger movements in August rose by 19.2 and 14.3 per cent, respectively. "The next financial year is also expected to witness healthy growth on expected reforms in ATF taxes, reduction in airport charges and flights by new entrants such as AirAsia and Tata-Singapore Airlines," says Dubey.
Meanwhile, ATF price, which had peaked to a record Rs 77,089 per kilolitre (Delhi prices) in October on weakening rupee, has been revised to Rs 73,607 from November. The decline in price has come after four consecutive hikes and will help airlines in improving business prospects.
In the first half of the current fiscal, ATF consumption grew 4.4 per cent compared with a decline of 4.8 per cent in the same period last fiscal. In September alone, the latest month for which data is available, ATF consumption has expanded by a robust 7.3 per cent.
While there is a base effect to the current growth, it is encouraging that consumption is not falling further. The consumption of 442,000 tonnes in September 2013 is almost comparable to the 445,000 tonnes in September 2011. 2011/12 had registered an all time high ATF consumption of 5.53 million tonnes. In fact, consumption of 2.67 million tonnes in the first half of this fiscal is on par with the 2.68 million tonnes in the same period in 2011/12.
Petroleum Products Planning and Analysis Cell, the data wing of the Petroleum Ministry, attributed the rising ATF consumption to higher domestic air travel owing to lower fares charged by airlines. "High ATF uplift does indicate increasing aircraft movements. We now have to see how the peak season of November to January period pans out," says Amber Dubey, Partner and Head, Aerospace and Defence, at global consultancy KPMG.
Data released by the Airports Authority of India also reveals an uptick in recent aircraft movement. It improved by 3.4 per cent in August, the latest month for which data is available, and by two per cent in July. Domestic and international passenger movements in August rose by 19.2 and 14.3 per cent, respectively. "The next financial year is also expected to witness healthy growth on expected reforms in ATF taxes, reduction in airport charges and flights by new entrants such as AirAsia and Tata-Singapore Airlines," says Dubey.
Meanwhile, ATF price, which had peaked to a record Rs 77,089 per kilolitre (Delhi prices) in October on weakening rupee, has been revised to Rs 73,607 from November. The decline in price has come after four consecutive hikes and will help airlines in improving business prospects.
