Newstrack

Big players warn about widening gap between capacity and market growth

Jyoti Koul - New Delhi

Growth in Indian aviation is beginning to evoke a lot of concern. Industry experts point out that growth in capacity in domestic civil aviation has been much more rapid than the traffic growth in the domestic sector, which in itself is a matter of extreme concern for industry players.

According to Saroj K Datta, executive director of Jet Airways, there is a widening gap between the capacity being provided and growth in the market. This is despite the rapid growth that the Indian domestic market is facing. "This widening gap has led to a continuous increase in the break-even load factors. To cross those load factors or meet those break-even load factors is a matter of great concern for all carriers," he said. The domestic civil aviation industry is estimated to have lost US$ 500 million in the year 2006-7 fiscal.

When asked what can be done to improve the situation, Datta said, that the industry itself has to find ways of controlling the situation whether by improving yield or reducing capacity. "To control this situation the industry does not need a regulator, the industry itself has to find solutions. No government entity can play a part in this. One of the main reasons of this capacity induction is the entry of new carriers in the domestic market during the last two years in order to achieve scale, economies of larger fleet size or operations. We may have to look forward to some unfortunate developments in the coming years if the increase in capacity is not controlled," warns Datta.