India’s domestic air passenger traffic down by 65-67% from April to May: Icra

The agency also said the average number of flights that departed daily was around 900 in May—significantly lower than the 2,000 departures in April this year
Representational image. (Bloomberg)
Representational image. (Bloomberg)
Updated on Jun 03, 2021 03:24 PM IST
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ByNeha LM Tripathi

As the number of Covid-19 infections rose, domestic passenger traffic for the Indian aviation sector crashed to around 1.9 to 2 million in May this year from around 5.73 million in April, revealed rating agency Icra. It also said the average number of flights that departed daily was around 900 in May—significantly lower than the 2,000 departures in April this year. The agency said the average number of passengers per flight during May was 72 against an average of 93 passengers per flight in April, 2021.

“The gradual decline depicts the continuous stress on demand, driven largely by the second wave of Covid-19, limiting travel to [people] only taking flights when necessary,” said Kinjal Shah, vice president and co-group head, Icra.

According to Icra, there was a sequential decline of approximately 65-67% in domestic passenger traffic from April to May this year, which, said Shah, meant that “domestic passenger traffic was lower than the June-July 2020 levels.”

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“Icra said that the airlines’ capacity deployment for May was lower by 54% to 55% compared to April (around 27,700 departures in May, against around 60,300 departures in April), indicating the lower demand stemmed from the averseness of consumers to travel due to the rise in infections,” Shah added.

The Ministry of Civil Aviation (MoCA) had permitted an increase in the deployment capacity of domestic routes, gradually from 33% from May 25, 2020, to 80% from December 3, 2020. However, it has reduced to 50% of pre-Covid levels from June 1, 2021, due to the second wave of the pandemic.

Since the demand for domestic travel itself is low due to the second wave, the airlines are flying at much lower capacity or passenger load factors (PLFs). The reduction in the permissible capacity deployment was reduced to 50% with effect from June 1, 2021. However Icra said that it is not expected to have any material impact on the airline operations.

In addition, MoCA also increased the minimum fare for domestic flights from June 1 this year. The lower air fare band has been increased by approximately 13% to 15%, keeping the upper limits unchanged.

“This will allow airlines to recoup some part of the increase in aviation turbine fuel (ATF) prices, thereby cushioning the impact on the airlines... The fare increase may not materially impact the passenger traffic demand as in current scenario, the travel is limited to only necessary travel,” Icra stated.

While scheduled international operations have been suspended further till June 30, 2021 under the Vande Bharat Mission (VBM), the international passenger traffic (inbound and outbound) for Indian carriers was approximately 3.5 million from May 7, 2020 to May 31, 2021.

For May 2021, the international passenger traffic for Indian carriers under VBM was estimated at approximately 140,000, which was a sequential decline of around 61% from April 2021.

This, Icra said, was due to the cancellation of flights to/from India by many countries like the US, the UK, Singapore, Kuwait, France, Canada, Australia, Iran, Indonesia and the UAE, which had air transport bubble (ATB) arrangements or are under VBM, citing the increase in Covid-19 cases.

“International operations through VBM or ATB routes were the only source of revenue for airlines and the cancellation of flights by the destination countries will further impact the beleaguered domestic carriers,” the agency concluded.

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Sunday, May 22, 2022