Logistics

‘Domestic air travel rose 41% in June as infections fell’

Our Bureau Hyderabad | Updated on July 06, 2021

ICRA sees continued stress on demand for leisure and business travel

 

June 2021 domestic air passenger traffic is estimated at 29-30 lakh, implying a sequential growth of 41-42 per cent from 19.8 lakh in May 2021.

Airlines’ capacity deployment for June 2021 (31,700 departures) was around 46 per cent higher than in June 2020 (21,696 departures). On a sequential basis, departures in June 2021 were higher by 14-15 per cent, as Covid-19 infections showed a downward trajectory.

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According to Kinjal Shah, Vice-President and Co-Group Head, ICRA: “For June 2021, the average daily departures were at 1,100, significantly higher than average daily departures of 700 in June 2020, and higher than 900 in May 2021, though it remains significantly lower than 2,000 in April 2021. The average number of passengers per flight during June 2021 was 94, against 77 in May 2021. Though there was some recovery observed in June 2021, there exists continued stress on demand, driven largely by the second wave of the pandemic, limiting travel to only necessary travel, while both leisure and business travel have been curtailed due to various statewide restrictions despite the decline in infections.”

Support for the travel sector

The Ministry of Civil Aviation (MoCA) had permitted a gradual increase in the capacity deployment on domestic routes from 33 per cent (with effect from May 25, 2020) to 80 per cent (with effect from December 3, 2020). However, this was reduced to 50 pre cent of pre-Covid levels with effect from June 1, 2021, due to the second wave of the pandemic. MoCA has now permitted increasing the capacity to 65 per cent with effect from July 5, to July 31, 2021.

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On July 1, 2021, the Ministry of Finance announced a financial support scheme in the form of working capital/ personal loans to 10,700 regional-level tourist guides recognised under the Ministry of Tourism, tourist guides recognised by state governments, and travel and tourism stakeholders (TTS) recognised by the Ministry of Tourism. The TTS segment will be eligible for a loan up to ₹10 lakh each, while tourist guides can get up to ₹1 lakh each as loan. This is expected to provide them the much-needed liquidity support and, in turn, boost the overall travel and tourism sector, with aviation remaining a key beneficiary. Additionally, to provide an impetus to the tourism industry, the finance ministry announced a scheme to issue one-month tourist visas free of charge to the first five lakh customers, with validity until March 31, 2022, or issuance of five lakh tourist visas, whichever is earlier.

Fuel price rise

While scheduled international operations have been suspended further till July 31, 2021, the Vande Bharat Mission (VBM) for evacuation of Indian citizens from foreign countries, which began on May 7, 2020, has ferried 37 lakh international passengers (inbound and outbound) on Indian carriers until June 30, 2021. For June 2021, international passenger traffic for Indian carriers under VBM was estimated at 1.47 lakh, which is a sequential growth of 4 per cent, as flights to/from India remained suspended by many countries that cited the new variant of Covid-19 and high infection levels.

While until February 2021, aviation turbine fuel (ATF) prices were lower on a year-on-year (YoY) basis, during March, April, May and June the prices were higher by 3 per cent, 59.8 per cent, 103.4 per cent, 86.3 per cent, respectivelys. In July, the prices have been higher by 59.7 per cent on a YoY basis, attributed to the low base of July 2020, when prices declined YoY by 31.1 per cent due to the impact of the pandemic.

Published on July 06, 2021

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