Domestic air traffic up 31% in Aug; Is aviation biz ready for takeoff?

In India, there were over 400 airports and airstrips, while 153 were operational. Passenger traffic amounted to over 115 million at airports across India in the financial year 2021, out of which over 10 million were international passengers. However, there was a drop in traffic for both domestic and international passengers. This was because of suspended passenger air travel due to the pandemic since the second half of March 2020.

The domestic passenger traffic has continued to register improvement and the same grew by 30-31 per cent at around 65-66 lakh in August 2021. The domestic passenger traffic has continued to register improvement and the same grew by 30-31 per cent at around 65-66 lakh in August 2021, compared to 50.1 lakh in July 2021, signifying a Y-o-Y growth of 131 per cent. The airlines' capacity deployment for August 2021 was around 99 per cent higher at 57,500 departures, as against 28,834 departures in August 2020. For August 2021, the average daily departures were at 1,900, significantly higher than the average daily departures of 900 in August 2020, and higher than 1,500 in July 2021 as Covid-19 infections demonstrated a downward trajectory.

The country's air cargo growth is expected to average 6.3 per cent annually over the next 20 years. India's civil aviation industry will require nearly 90,000 new pilots, technicians and cabin crew personnel over the next 20 years. The Ministry of Civil Aviation (MoCA) has now permitted increasing the capacity to 72.5 per cent with effect from August 12, 2021, until further orders. In addition, the MoCA also increased the minimum and maximum fare band by 10-13 per cent for domestic flights with effect from August 12, 2021 until August 31, 2021. In September 2021, the prices were higher by 54.6 per cent on a Y-o-Y basis, attributed to the low base of September 2020.

In ICRA's view, the price increase may not materially impact the passenger traffic demand as in the current scenario, travel is limited to only necessary travel, while both leisure and business travel have been curtailed due to various state-wide restrictions and the spread of the infections. However, it will allow airlines to recoup some part of the increase in ATF prices, thereby cushioning some impact on the airlines' losses.

Capa India  expects  80  million  passengers  to  fly  domestically and 16 million to fly abroad in FY22. Domestic air passenger traffic in India is expected to surge 52 per cent this fiscal while international passenger traffic is expected to rise 60 per cent, rebounding from the turbulence caused by the pandemic, Capa India pointed out.

The airlines' capacity deployment was around 99 per cent higher at 57,500 departures in August 2021, as against 28,834 departures in August 2020. On a sequential basis the number of departures in August 2021 rose by 22 per cent

According to them leisure travel will lead the way. Higher ticket prices could hamper growth. The government will have to step in. Elevated aviation turbine fuel (ATF) prices continue to pose a near term challenge; however, a marginal sequential decline of 3.8 per cent was witnessed in September 2021. Airlines will need to get their act together. Purchase of new aircraft will have to be carefully calibrated. And focus on cargo freight will have to continue for some time.