Smaller cities register dip in air passengers: AAI Data

​New Delhi

India’s airlines are moving capacity to high-density routes between metros from flights connecting smaller cities and towns, which has led to higher fares that affected passenger growth in these places in the three months to March, according to data from the Airports Authority of India.

Cities like Ahmedabad, Srinagar, Chandigarh, Patna, Nagpur, Darbhanga, Jammu, Dehradun, Kochi, Ranchi, Raipur and Udaipur have seen a decline in domestic passenger in the first three months of 2024, showed data collated by the state-run airports operator. The metros continued to grow passenger footfall.

In Bihar’s Darbhanga, for instance, traffic declined by as much as 27.2% in the March quarter compared to the same period last year. The decline in passenger footfall in Nagpur was 13.7%, Jammu 11.7%, Chandigarh 8.8%, Patna 8.3%, Udaipur 3.7%, Srinagar 3.1%, Ranchi 2.8%, Ahmedabad 2.5% and Kochi 0.3%, the data showed.

This is for the first time in the past five years that domestic passengers at tier-2 airports have declined. This slump in passenger numbers at smaller airports was in line with a trend being played out in India after the pandemic, when larger cities and premium segments started driving expansion.

The main reason for this trend was that airlines are shifting capacities from smaller towns to the metros, experts said. High airfares due to capacity constraints could be the culprit, said Ajay Prakash, owner of Nomad Travels and president of Travel Agents Federation of India, a lobby group. “These numbers are also a perfect example of unequal distribution of wealth in the country,” he added.

India’s carriers have been struggling with various issues, including grounding of budget airline Go First in May due to engine issues and the grounding of at least 100 planes of market leader IndiGo for similar problems.

The decline is also attributed to capacity rationalisation that has led to airlines shifting flight capacity from smaller cities to larger ones, airline executives said. “Airlines do not leave the market. They instead reduce their capacities from smaller markets to focus on the premium ones, the ones that give them more revenue,” an executive said, requesting anonymity. “The best example is Nagpur. Decrease in domestic passengers at Nagpur is worrying.”

“The reason for the decline in passenger footfall at selective tier-2 important city airports is supply chain issues leading to the aircraft crisis,” another executive said. “Darbhanga, for instance, could have seen a drop in passenger footfall due to SpiceJet, which had major flights operating out of the city, pulling out most of its flights,” she said, declining to be named. Darbhanga airport started operations in 2020 under the government’s UDAN (Udey Desh ka Aam Naagarik) scheme.

The decline could also be due to seasonality factors, including meetings around the G-20 summit that India hosted, and reduction in capacity due to closure of Go First, according to Ameya Joshi, founder of Network Thoughts, an aviation consultancy.

“2023 was seeing hyper traffic in some months due to the G20 summit. February 2023, for example, was the Sherpa meeting in Ahmedabad and hence could have been higher, but January 2024 is also lower than January 2023, which points to a reduction in number of movements, especially those of SpiceJet and Go First since Ahmedabad had a sizable presence of Go First,” Joshi said. “The situation is the same for Chandigarh.”

Go First filed for insolvency last year, saying it was unable to sustain operations due to delayed repair and maintenance of Pratt & Whitney plane engines.

Simultaneously, the domestic aviation sector has seen various mergers. Vistara run by the Tata group is expected to be merged with Air India soon. AirAsia India and Air India Express, also operated by the conglomerate, have been merged to become AIX Connect.

“The airlines’ immediate survival is the priority and they are seen working towards it,” another airline official said, wishing to remain unnamed. “IndiGo has been wet leasing aircraft and airlines like Air India have been slowly inducting their aircraft from their order book.”

The Tata group, IndiGo and Akasa have together ordered over 1,100 aircraft worth $140 billion at their list price between February last year and January. Domestic air passenger traffic in India is expected to rise by 8-13% in 2024-25, according to estimates by rating agency Icra.