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Domestic air passenger traffic jumps by 2-3% in September as Covid-19 cases decline: ICRA

Domestic air passenger traffic jumps by 2-3% in September as Covid-19 cases decline: ICRA

The ratings agency, however, continues to maintain a negative outlook on the Indian aviation industry.

The airlines' capacity deployment for September 2021 was around 54 per cent higher than September 2020 The airlines' capacity deployment for September 2021 was around 54 per cent higher than September 2020

Domestic air passenger traffic has jumped by 2-3 per cent to 68-69 lakh passengers in September 2021 compared to 67 lakh passengers in August 2021, as Covid-19 infections continued to decline in the country, said ratings agency ICRA.

The airlines' capacity deployment for September 2021 was around 54 per cent higher than September 2020. On a sequential basis, the number of departures in September 2021 was 6 per cent higher.  "For September 2021, the average daily departures were at ~2,100, significantly higher than average daily departures of ~1321 in September 2020, and higher than ~1,900 in August 2021," noted the ratings agency in an official release.  

However, ICRA continues to maintain a negative outlook on the Indian aviation industry. It conveyed that the financial performance of the Indian airlines is likely to remain weak as material recovery in passenger traffic to pre-Covid-19 levels is unlikely in the near term. This is due to continued restrictions on international travel and subdued demand from the corporate traveller segment.

"Notwithstanding the improving pace of vaccination and sequential improvement in demand for air travel (primarily driven by leisure segment), the domestic passenger traffic at ~68-69 lacs in September 2021, continues to be lower by 38% compared to pre-Covid-19 levels," ICRA said.

On September 18, the Ministry of Civil Aviation (MoCA) permitted increasing the capacity deployment on domestic routes to 85 per cent from 72.5 per cent. ICRA believes that with the decline in Covid-19 cases, with leisure travel taking off and with the onset of the festive season, the increase in capacity to 85 per cent is a step in the right direction to encourage air travel.

The Aviation Ministry had also modified the applicability of the fare caps in each of the bands up to next 15 days on a rolling basis from a 30-day rolling basis earlier. "In ICRA's view, the reduction in fare cap roll over period from 30 days to 15 days is a move towards market-driven pricing as applicable during pre-Covid-19 times, wherein the pricing was determined by the actual supply-demand dynamics and actual passenger load factors," the agency noted. 

Edited by Mohammad Haaris Beg

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