ATF Hike May Hit Air Traffic: Assocham

Faced with infrastructure bottleneck and frequent increase in prices of aviation turbine fuel (ATF), the Indian aviation industry will find it difficult to sustain the robust growth in air traffic, a study by Assocham Eco Pulse (AEP) revealed.

The Assocham study has further said that the 26 per cent growth in air passengers in the first quarter of 2004-05 could not be repeated in the April-June period as the growth had slumped to 16.5 per cent. While the Indian skies have been witnessing major competition in terms of fares, over 12 to 13 per cent rise in the ATF prices has started telling upon the flying cost.

The result is that many airlines have revised their fares by 10 per cent or more. In fact, apex tickets booked earlier are also attracting the surcharge due to the rise in ATF and the passenger fares. According to Mahendra K Sanghi, president of Assocham, “Due to the entry of many new players in the domestic aviation sector, the Indian aviation should grow manifold. However, the problem of infrastructure at the airports and rising crude prices may spoil the party for passengers and impact the pace of growth for the airlines.”

‘The Indian aviation sector, which had clocked a 24 per cent growth in 2004, has stepped into 2005 with the promise of an explosive growth - but the feel good factor is wearing thin,’ stated the report.

The 16.5 per cent growth in the air traffic is a healthy sign in itself with the domestic air passenger traffic registering a growth of 17.4 per cent which is more than the international air passenger traffic, which stood at 14.5 per cent during April-June 2005.