Domestic passenger traffic accelerates in Oct 2021 with growth of 24-25%

Domestic passenger traffic accelerates in Oct 2021 with growth of 24-25%

Domestic air passenger traffic increased by 24-25% in October 2021, reaching around 87-88 lakh, up from 71 lakh in September 2021. The same figure represents a 67% year-on-year increase. The airlines' capacity deployment for October 2021 was approximately 46% higher than that of October 2020 (72,000 departures in October 2021 versus 49,150 departures in October 2020). On a sequential basis, the number of departures in October 2021 increased by 18%, as Covid19 infections showed a downward trend.

Mr. Suprio Banerjee, Vice President & Sector Head, ICRA, added, "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 the average daily departures of 2,100 in September 2021." The average number of passengers per flight in October 2021 was 122, up from 117 in September 2021. Though the recovery continued in October 2021, demand from the corporate traveller segment remains subdued, as evidenced by passenger traffic being 28% lower in October 2021 compared to pre-Covid levels."

The Ministry of Civil Aviation (MoCA) has restored permitted capacity to 100% for domestic operations with effect from October 18, 2021. Given the onset of the holiday season, ICRA believes that increasing permitted capacity to 100 percent levels is a step in the right direction. Due to the resurgence of the second wave of the pandemic, the MoCA reduced the permissible capacity deployment to 50% of pre-Covid levels, with effect from June 1, 2021. It subsequently increased the permitted capacity to 72.5 percent with effect from August 12, 2021, and to 85.0 percent with effect from September 18, 2021.

Scheduled international operations have been postponed until November 30, 2021, under the Vande Bharat Mission (VBM), which began on May 7, 2020, to evacuate Indian citizens from foreign countries. For the period May 7, 2020 to October 31, 2021, Indian carriers' international passenger traffic (both inbound and outbound) totaled 51 lakh. International passenger traffic for Indian carriers under the VBM is expected to reach 5.3 lakh in October 2021, representing a 30 percent increase over the previous year.

One major source of concern for the aviation industry is the price of aviation turbine fuel (ATF), which has increased by 94.4% year on year until November 2021, owing primarily to an increase in crude oil prices. This, combined with relatively low capacity utilisation of the aircraft fleet, will continue to weigh on Indian carriers' financial performance in FY2022. Furthermore, most Indian carriers' credit profiles continue to be characterised by a lack of liquidity.