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Domestic Passenger Traffic Set to Witness 41-46% De-growth in FY21: ICRA

Domestic airlines witnessed a rather slow uptick in capacity in July 2020 despite recommencement of operations over two months ago. Airlines operated at a much lower capacity at ~27% in July 2020 vis-à-vis their July 2019 capacity, which was a marginal increase over the ~25% capacity deployed in June 2020. For July 2020, the domestic passenger traffic was 20.6 lakhs, as against 118.6 lakhs in July 2019, a Y-o-Y de-growth of ~83%. It witnessed a sequential improvement of ~4% over 19.8 lakhs in June 2020. Sometime back the Ministry of Civil Aviation (MoCA) permitted increasing the capacity to 45% with effect from June 27, 2020, post the initial recommencement of operations of the scheduled domestic flights with effect from May 25, 2020 to a limited extent i.e. maximum 1/3rd of their respective approved capacity of Summer Schedule 2020.

Giving further analytical insights, Kinjal Shah, Vice President, ICRA, says, “The number of flights departing has also gradually increased from 416 on Day 1 to 890 on Day 69 (July 31, 2020). For July 2020, the average daily departures were 780, significantly lower than the average daily departures of 2,845 in July 2019, though better than 723 in June 2020. The average number of passengers per flight during July 2020 was 86, as against an average of 134 passengers per flight in July 2019. Thus, it is expected that the domestic aviation industry operated at a passenger load factor (PLF) of ~55% in July 2020, as against 86.3% in July 2019, that too on a very low capacity. The PLF for July 2020 has sequentially moderated from ~58% in June 2020 due to the increase in capacity deployment by ~11%. ICRA maintains that H2 FY2021 will witness some recovery, with Q4 FY2021 witnessing YoY de-growth of just 3-14% in domestic passenger traffic with improved PLFs, and overall FY2021 witnessing ~41-46% de-growth in domestic passenger traffic.”

To ensure that the airlines do not charge excessive fares and also to ensure that the journey is performed only for essential purposes, the MoCA fixed a fare band within which the airlines are supposed to charge fares. These restrictions on capacity and fares, which were earlier valid till August 24, 2020, have been extended further till November24, 2020.

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