Domestic passenger traffic for the Indian Aviation sector crashed to ~19-20 lakh in May 2021 reaching June–July 2020 levels

Domestic passenger traffic for the Indian Aviation sector crashed to  ~19-20 lakh in May 2021 reaching June–July 2020 levels

May 2021 Seen a Significant ~65-67% sequential Decrease in domestic passenger traffic, Signaling averseness of Customers To travel as a result of the spike in diseases . Support by the Government concerning upward revision in air fares and policy of this industry under the Emergency Credit Line Guarantee Scheme (ECLGS) 3.0, a positive for the industry, providing the airlines with all the much-needed liquidity service.

For May 2021, national passenger traffic is projected at ~19-20 lakh, suggesting a successive reduction of ~65-67% in comparison with ~57.3 lakh at April 2021. For this, the domestic passenger traffic attained lower compared to June-July 2020 levels. The airlines' capacity setup for May 2021 was reduced by ~54-55% in comparison to April 2021 (~27,700 departures in May 2021, against ~60,300 departures at April 2021), indicating the lower demand coming from averseness of consumers to travel as a result of growth in infections.

Based on Ms. Kinjal Shah, Vice President & Co-Group Head, ICRA:"For May 2021, the typical daily departures were ~900, substantially lower compared to ~2,000 at April 2021.  The average number of passengers per trip throughout May 2021 has been 72, against a mean of 93 passengers per flight in April 2021. The slow decrease portrays the continuing strain on demand, driven mostly by the next wave of Covid-19, restricting travel to just necessary traveling, while both leisure and business travel have been curtailed due to several state-wide constraints and also the spread of these infections."

The Ministry of Civil Aviation (MoCA) allowed increasing the potential deployment on national routes gradually from 33%, with effect from May 25, 2020, to 80%, with effect from December 03, 2020.  But, it's decreased the permissible capacity deployment to 50% of pre-Covid amounts with effect from June 01, 2021 because of resurgence of this next wave of the outbreak. Considering that the requirement for national travel itself is significantly reduced because of averseness of customers to travel because of increase in Covid-19 infections, thus leading to the airways flying at much lower capacity and/ or passenger loading variables (PLFs), the decrease in the permissible capacity setup to 50% with effect from June 01, 2021 isn't anticipated to have any material effect on the airline operations. Additionally, the MoCA also raised the minimum fare for domestic flights with effect from June 01, 2021. The decrease air fare band was improved by ~13-15%, maintaining the top limits unchanged. This will permit airlines to regain some region of the gain in aviation turbine fuel (ATF) prices, thus cushioning some influence on the airlines' losses. In ICRA's opinion, the fare increase might not materially affect the passenger traffic requirement as in present situation, the journey is restricted to only necessary traveling.

The Ministry of Finance has also contained the Civil Aviation industry under ECLGS 3.0, which supplies airlines access to further funds to the extent of 40% of the loan outstanding or Rs. 200 crore, whichever is lower, at attractive interest prices. This will offer the much-needed-liquidity help to the airlines to help them manage their money flows in the long run.

While the scheduled international operations are suspended further till June 30, 2021, beneath the Vande Bharat Mission (VBM) for evacuation of Indian citizens from overseas nations, which began from May 07, 2020, the worldwide passenger traffic (inbound and outbound) for Indian carriers was ~35 lakh for the period May 07, 2020 to May 31, 2021. For May 2021, the global passenger traffic for Indian carriers below the VBM was estimated at ~1.4 lakh, a sequential decrease of ~61%.  This was a result of cancellation of flights to/from India by several nations like the US, the united kingdom, Singapore, Kuwait, France, Canada, Australia, Iran, Indonesia and the UAE, that had air transportation bubble (ATB) arrangements or are beneath the VBM, mentioning the rising coronavirus cases. The worldwide operations throughout VBM or the ATB course were the sole source of revenue for airlines along with the cancellation of flights from the destination countries will further affect the beleaguered domestic carriers.

While before February 2021, the ATF prices were still lower on a YoY basis, in March 2021, April 2021 and May 2021, prices were  Greater by 3.0%, 59.8%, 103.4%, respectively, on a YoY basis. In June 2021, the prices are greater by 86.3% on YoY basis,  Attributed to the very low bottom of June 2020, once the prices dropped YoY by 47.5% because of the effect of the pandemic.