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  • Domestic passenger traffic witnesses a 41-42% sequential growth in June 2021 as Covid-19 infection trajectory descends: ICRA

    Published on July 6, 2021

    ·         June 2021 witnessed a 51% YoY growth in domestic passenger traffic as infections declined

    ·         Scheme to issue one-month tourist visas free of charge to first five lakh customers, until March 31, 2022, provides much-needed impetus to inbound international travel; however, the same remains contingent on resumption of scheduled international travel operations 

    ·         Rising Air Turbine Fuel (ATF) prices remains a near term challenge

    For June 2021, domestic passenger traffic is estimated at ~29-30 lakh, implying a sequential growth of ~41-42% compared to ~19.8 lakh in May 2021. The airlines’ capacity deployment for June 2021 was around 46% higher than June 2020 (~31,700 departures in June 2021, against 21,696 departures in June 2020). On a sequential basis, the number of departures in June 2021 were higher by ~14-15%, as Covid-19 infections demonstrated a downward trajectory.

    According to Ms. Kinjal Shah, Vice President & Co-Group Head, ICRA: For June 2021, the average daily departures were at ~1100, significantly higher than average daily departures of ~700 in June 2020, and higher than ~900 in May 2021, though remains significantly lower than ~2000 in April 2021. The average number of passengers per flight during June 2021 was 94, against an average of 77 passengers per flight in May 2021. Though there is 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 state-wide restrictions, despite the decline in infections.”

    The Ministry of Civil Aviation (MoCA) permitted increasing the capacity deployment on domestic routes gradually from 33%, with effect from May 25, 2020, to 80%, with effect from December 03, 2020. However, it 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 has now permitted increasing the capacity to 65% with effect from July 5, 2021, applicable up to July 31, 2021. 

    On July 01, 2021, the Ministry of Finance announced a scheme providing financial support in the form of working capital/personal loans to ~10,700 regional level tourist guides recognised under the Ministry of Tourism and tourist guides recognised by the state governments and travel and tourism stakeholders (TTS) recognised by the Ministry of Tourism. TTS’ will be eligible to get a loan up to Rs. 10 lakh each, while tourist guides can avail loans of up to Rs. 1 lakh each. This is expected to provide the much-needed-liquidity support to the TTS, which in turn is expected to boost the overall travel and tourism sector, of which aviation remains 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 first five lakh customers, validity of which is until March 31, 2022 or issuance of five lakh tourist visas, whichever is earlier. This is a right step towards demand push for the airlines sector, primarily directed at inbound international travel. However, impact of the same is expected to be realised only once scheduled international operations are permitted by the Government on a regular basis and the global fear psychosis related to travel to India subsides.

    While the scheduled international operations have been suspended further till July 31, 2021, under the Vande Bharat Mission (VBM) for evacuation of Indian citizens from foreign countries, which started from May 07, 2020, the international passenger traffic (inbound and outbound) for Indian carriers has been ~37 lakh for the period May 07, 2020 to June 30, 2021. For June 2021, the international passenger traffic for Indian carriers under the VBM was estimated at ~1.47 lakh, a sequential growth of ~4% as flights to/from India remained suspended in June 2021 by many countries, citing the new variant of Covid-19 and high infection levels.

    While until February 2021, the aviation turbine fuel (ATF) prices were lower on a YoY basis, in March 2021, April 2021, May 2021 and June 2021, prices were higher by 3.0%, 59.8%, 103.4%, 86.3% respectively, on a YoY basis. In July 2021, the prices have been higher by 59.7% on a YoY basis, attributed to the low base of July 2020, when the prices declined YoY by 31.1% due to the impact of the pandemic.