Aviation. Omicron: Domestic air traffic dips 43 pc in Jan

Domestic passenger traffic plunged to 42-43 per cent sequentially in January 2022 with the emergence of the Omicron variant of the SARS-CoV-2 virus and the ensuing restrictions, according to credit rating agency ICRA.

Average daily departures stood at 2,032, marginally lower than 2,190 in January 2021, and significantly lower than 2,790 in December 2021; the average number of passengers per flight during January 2022 was 102 vis-à-vis 129 in December 2021

The rise in aviation turbine fuel (ATF) prices alongside the emergence of a new Covid -19 variant continues to be a drag on recovery in Q4 FY2022.

The third wave of the pandemic and the resultant restrictions saw domestic air passenger traffic drop to about 64 lakh in January 2022 from about 112 lakh in December 2021. It corresponds to a year-on-year decline of about 17 per cent, as passenger traffic stood at about 77 lakh in January 2021. Airlines’ capacity deployment for January 2022 was around 7 per cent lower (62,979 departures) than in January 2021 (67,877). On a sequential basis, departures in January 2022 fell about 27 per cent.

Suprio Banerjee, Vice-President and Sector Head, ICRA, said, “The sequential recovery slumped in January 2022 with emergence of the new variant (Omicron) and related restrictions impacting leisure travel segment along with existing subdued demand from the corporate traveller segment... (it) will keep recovery prospects subdued for the domestic airlines sector in the current quarter.”

With effect from October 18, 2021, the Ministry of Civil Aviation (MoCA) had restored permitted capacity to 100 per cent for domestic operations. It had reduced it to 50 per cent of pre-Covid level from June 1, 2021, during the severe second wave of the pandemic. The permitted capacity was hiked to 72.5 per cent from August 12 and further to 85 per cent from September 18.

International flights

For scheduled international operations, according to the latest directive, dated January 19, 2022, from the Director General of Civil Aviation (DGCA), the suspension has been extended till February 28, due to the new coronavirus variant. MoCA has, meanwhile, allowed international operations under the Vande Bharat Mission (VBM) and Air Transport Bubbles (ATB).

Under VBM, for evacuation of Indian citizens from foreign countries, which started on May 7, 2020, international passenger traffic (inbound and outbound) for Indian carriers stood at about 70 lakh upto January 31, 2022. For January 2022, the VBM figure was estimated at 5.64 lakh, a sequential decline of about 17 per cent.

The full benefit of the introduction of e-passports for 2022-23, as announced in the recent Budget to enhance convenience for international travel, will be realised post resumption of scheduled international travel.

One major concern that remains a drag on the aviation sector is the ATF price, which rose sharply by 59.9 per cent on a year-on-year basis till February 2022. It is mainly attributed to the increase in crude oil prices. This, coupled with relatively low capacity utilisation of 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 characterised by weak liquidity.

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