Airlines’ worst nightmare is coming true with fuel costs showing no signs of softening and fewer people opting to fly. In June, perhaps for the first time in recent years, the number of passengers flying dropped sharply — both sequentially as well as year-on-year.

Data released by the Directorate General of Civil Aviation (DGCA) today reveals only 35 lakh took to the skies in June, 17 per cent less than 41 lakh in the previous month. In June 2007, 36.4 lakh people travelled by air. Passenger growth in June 2007 jumped as much as 35 per cent compared to June 2006.

A poor turnout was expected given the fact that airlines hiked fares twice by as much as 15-20 per cent last month, but the extent of slide and a free-fall in their load factors to a dismal 65 per cent, has caught most analysts unaware.

In June, carriers first increased the fuel surcharge component on tickets by Rs 300 and Rs 550 on short-haul and long-haul flights, respectively. This was followed by another steep increase — as much as Rs 1,000- Rs 3,000 per ticket for full service carriers and Rs 500-2,000 for no-frills operators.

With passengers shying away from the skies, flights have been operating at just half their capacities. Bleeding national carrier Air India (domestic) that registered a staggering Rs 2,100 crore loss last fiscal, posted its worst-ever load factor of 59 per cent in June.

Load factors for other domestic airlines were not much better: market leader Jet Airways and JetLite operated at 68 per cent capacity, Air Deccan-Kingfisher at 63 per cent and low cost carriers SpiceJet, GoAir and IndiGo running around 70 per cent. In May 2008, these carriers had witnessed average load factors of around 75 per cent.

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