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HomeBusinessDomestic Air Passenger Traffic Accelerates In Oct 2021

Domestic Air Passenger Traffic Accelerates In Oct 2021

Domestic air passenger traffic grew by ~24-25% at around 87-88 lakh in October 2021, compared to ~71 lakh in September 2021. The same reflects a Y-o-Y growth of ~67%. The airlines’ capacity deployment for October 2021 was around 46% higher than October 2020 (~72,000 departures in October 2021, against 49,150 departures in October 2020). On a sequential basis, the number of departures in October 2021 was higher by ~18%, as Covid-19 infections demonstrated a downward trajectory.

Commenting further, Mr. Suprio Banerjee, Vice President & Sector Head, ICRA said, “For October 2021, the average daily departures were at ~2,400, significantly higher than the average daily departures of 1585 in October 2020, and higher than ~2,100 in September 2021. The average number of passengers per flight during October 2021 was 122, against an average of 117 passengers per flight in September 2021. Though the recovery continued in October 2021, demand continues to be subdued from the corporate traveler segment as reflected by passenger traffic being lower by ~28% in October 2021 compared to pre-Covid levels.”

With effect from October 18, 2021, the Ministry of Civil Aviation (MoCA) has allowed restoration of the permitted capacity to 100.0% for domestic operations. In ICRA’s view, the increase in permitted capacity to 100.0% levels is a step in the right direction, given the onset of the festive season. It may be recalled that the MoCA had reduced the permissible capacity deployment to 50% of pre-Covid levels, with effect from June 01, 2021, due to the resurgence of the second wave of the pandemic.

It had subsequently increased the permitted capacity to 72.5%, with effect from August 12, 2021, and increasing the capacity further to 85.0% with effect from September 18, 2021.

As for scheduled international operations, they have been suspended further till November 30, 2021, under the Vande Bharat Mission (VBM) for evacuation of Indian citizens from foreign countries, which started from May 07, 2020. International passenger traffic (inbound and outbound) for Indian carriers stood at ~51 lakh for the period May 07, 2020, to October 31, 2021.

For October 2021, international passenger traffic for Indian carriers under the VBM was estimated at ~5.3 lakh, a sequential growth of ~30%.

One major concern that continues to worry the aviation sector is the aviation turbine fuel (ATF) prices, which have seen a sharp increase of 94.4% on a Y-o-Y basis till November 2021, this is mainly attributed to increasing in crude oil prices. This, coupled with relatively low capacity utilization of the aircraft fleet, will continue to weigh on the financial performance of Indian carriers in FY2022. Furthermore, the credit profile of most Indian carriers continues to be characterized by a weak liquidity position.

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