Airlines' yield on flights to Singapore, Bangkok under stress
With domestic carriers adding flights and frequency to East Asian destinations like Bangkok and Singapore, the yield on these routes has come under pressure.
"Most airlines have added capacity on these routes after suspension of Jet Airways' operations. Now the capacity has far exceeded the demand and making these flights commercially unviable," said an Air India executive.
In the last few months, most domestic airlines including Vistara and GoAir have launched flights from various Indian cities to Singapore and Bangkok to tap the leisure and corporate travel segment. Experts said that additional low-cost capacity launched by SpiceJet, IndiGo and GoAir have resulted in lower margin.
"I think the yield on South East Asian routes has significantly fallen as almost all the carriers are putting capacity on these sectors," said Ankur Bhatia, Executive Director of diversified Bird Group.
Last month, GoAir launched flights to Singapore from Bengaluru and Kolkata. Tata-Singapore Airlines joint venture Vistara operates two daily flights to Singapore from Delhi and Mumbai. SpiceJet has added frequency to both Singapore and Bangkok. It has plans to operate flights to Bangkok from Guwahati too.
Following its launch of international flights, IndiGo has aggressively covered key markets in East Asia including Malaysia and Myanmar. It recently launched flights to Ho Chi Minh City in Vietnam.
"IndiGo's flight to Ho Chi Minh City from Kolkata is less than satisfactory," said an industry source.
Rajji Rai, Chairman of travel company Swift Group said there is a dip in demand on the South East Asian sectors. He said on these routes, supply has increased and as a result average revenue per passenger has come down.
(Nirbhay Kumar can be contacted at email@example.com)
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