Recovery in domestic air passenger traffic in August 2020 from previous month but down from previous year: ICRA

ICRA is an independent and professional investment Information and Credit Rating Agency, and is part of the ICRA Group of Companies.

However, the domestic passenger traffic witnessed a decline of 77 per cent compared to the same month in the previous year.

The capacity deployment in August 2020 at 33 per cent (vis-a-vis August 2019) is rather a slow uptick despite recommencement of operations over three months ago, according to the report.

However, it was an increase over the 27 per cent capacity deployed in July 2020.

Kinjal Shah, Vice President, ICRA, said, “The number of flights departing has also gradually increased from 416 on Day 1 to 1156 on Day 101 (September 02, 2020). For August 2020, the average daily departures were ~930, significantly lower than the average daily departures of 2,846 in August 2019, though better than 780 in July 2020.”

“The average number of passengers per flight during August 2020 was 98, as against an average of 133 passengers per flight in August 2019. Thus, it is expected that the domestic aviation industry operated at a passenger load factor (PLF) of ~63 per cent in August 2020, as against 85.1 per cent in August 2019, that too on a very low capacity,” said Shah.

The PLF for August 2020 has sequentially improved from 55 per cent in July 2020 despite the increase in capacity deployment by 19 per cent.

Overall, from May 25, 2020 till August 31, 2020, the domestic passenger traffic has been more than 7 million.

The release also mentioned that the Ministry of Civil Aviation (MoCA) permitted increasing the capacity to 45 per cent 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 one-third of their respective approved capacity of Summer Schedule 2020.

MoCA, according to the release, has further permitted increasing the capacity to 60 per cent with effect from September 2, 2020.

This apart, through a circular dated August 27, 2020, the MoCA has also amended certain provisions, like allowing airlines to provide meals on board, serve pre-packed snacks/meals/ pre-packed beverages, and allowing in-flight entertainment, however with riders.

While the scheduled international operations are yet to start, the MoCA has permitted international operations under the Vande Bharat Mission (VBM) and Air Transport Bubbles (ATB).

Under the VBM for evacuation of Indian citizens from foreign shores, which started from May 7, 2020, the international passenger traffic (inbound and outbound) has been 632,741 for the period May 7, 2020 to August 31, 2020.

For August 2020, the number of international passenger traffic was 216,666, a Y-o-Y decline of 89.0 per cent.

The release said that as for aviation turbine fuel (ATF) prices, following the pandemic outbreak, crude oil prices declined materially – reached a low of US$ 19/ barrel in April 2020 thereby leading to a decline in ATF prices.

However, the crude oil prices have increased gradually since then, and currently ranges around US$ 44/ barrel.

Consequently, the ATF prices increased sequentially by 24.1 per cent in July 2020 and by 4.2 per cent in August 2020.

However, it declined sequentially by 3.4 per cent in September 2020, which is also lower by 32.3 per cent on a Y-o-Y basis.

“The prolonged shutdown of manufacturing activities in several countries and the subsequent impact of the outbreak on the global economic activity will keep the crude oil prices and thus the ATF prices low,” said Shah.