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  • Load Factor, Yields Key To India Recovery
    Posted by Jim M 5:42 PM on Apr 15, 2010

    Relieved ministers are looking hopefully at signs that the marriage of Air India and Indian Airways is finally arresting the slide that would have taken both carriers down if not addressed.

    Civil Aviation Minister Praful Patel allows that the combination is still making red ink, but tells reporters at a meeting of the U.S. India Business Council that the pace of losses is slowing.

    This is undoubtedly good news, but the careful student will look for other signs too, chief among them a recovery in load factors and yields. These have been less impressive in recent years, and they point to a fragility in the Indian aviation market environment that needs shoring up.

    Nearly any Indian airline you look at suffered slips in both load factor and yield from 2007, when the country moved to combine Air India and Indian Airlines into what was supposed to be a big powerhouse.

    JetAirways, which boasts more departures than any other Indian airline, underscores what's happening: in 2009, the airline carried 350,000 fewer passengers than it did the year before. Yet it offered 7,060 more flights at the same time: more airplanes, flying fewer travelers.

    To be sure, most analysts see traffic picking up again as the economic climate eases across the entire South Asian region, and those passengers will go a long way towards soaking up some of those empty seats. But the imbalance between seats for sale and travelers to fill them won't be erased overnight. And that's why many airline analysts might be happier if capacity exits the market as the traffic recovers.

    Tags: tw99, India, Praful, AirIndia, JetAirways

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