29.1 C
October 4, 2023

Domestic Passenger Traffic Accelerates with Sequential Growth of 2-3 percent: ICRA

Domestic passenger traffic accelerates

September 2021 witnessed a 2-3% sequential growth and 74% YoY growth in domestic passenger traffic as infections declined. However, elevated aviation turbine fuel (ATF) prices continue to pose a near term challenge; sequential increase of 9.0% witnessed in October 2021.

The domestic air passenger traffic grew by ~2-3% at around 68-69 lakh in September 2021, compared to ~67 lakh in August 2021. The same reflects a Y-o-Y growth of ~74%. The airlines’ capacity deployment for September 2021 was around 54% higher than September 2020 (~61,100 departures in September 2021, against 39,628 departures in September 2020). On a sequential basis, the number of departures in September 2021 were higher by ~6%, as Covid-19 infections demonstrated a downward trajectory.

Suprio Banerjee, VP & Sector Head, ICRA

Suprio Banerjee, Vice President & Sector Head, ICRA said: “For September 2021, the average daily departures were at ~2,100, significantly higher than the average daily departures of ~1,321 in September 2020, and higher than ~1,900 in August 2021, though they remained lower than ~2,200 in Jan 2021. The average number of passengers per flight during September 2021 was 113, against an average of 117 passengers per flight in August 2021. Though the recovery continued in September 2021, demand continues to be subdued from the corporate traveller segment as reflected by passenger traffic being lower by ~38% in September 2021 compared to pre-Covid levels.

The Ministry of Civil Aviation (MoCA), 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 increased the permitted capacity to 72.5% with effect from August 12, 2021, but has now permitted increasing the capacity to 85.0% with effect from September 18, 2021 until further orders. Additionally, effective September 18, 2021, the Ministry relaxed the fare cap rule wherein the fare caps in each of the bands shall be applicable up to next only 15 days on a rolling basis. Hence, the minimum and maximum fare chargeable shall continue to be rolled over for the next 15 days cycle compared to 30 days earlier. In ICRA’s view, the increase in permitted capacity to 85.0% levels is a step in the right direction, given the onset of the festive season. Also, reduction in fare cap roll over period from 30 days to 15 days is a move towards market driven pricing as applicable during the pre-Covid period, wherein the pricing was determined by the actual demand-supply dynamics and real passenger load factors.

While the scheduled international operations have been suspended further till October 31, 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 ~46 lakh for the period May 07, 2020 to September 30, 2021. For September 2021, international passenger traffic for Indian carriers under the VBM was estimated at ~4.0 lakh, a sequential growth of ~30%.

As for the aviation turbine fuel (ATF) prices, there has been a sharp increase of 78.6% on a YoY basis till October 2021, attributed to increase in crude oil prices This coupled with low capacity utilisation of aircraft fleet will continue to weigh on financial performance of Indian carriers in FY2022. Furthermore, the credit profile of most Indian carriers continues to be characterised by a weak liquidity position.

Related posts

Plug and Play Welcomes Sabre as its Newest Travel and Hospitality Partner 


Celebi India Bags Ground-Handling Contract at The Chennai International Airport


Frustration with Travel Restrictions Grows


Leave a Comment