The Indian domestic aviation industry is expected to suffer a de-growth of passenger traffic in the range of 41 to 46 per cent in fy2021, according to a report by rating agency, ICRA.
Based on sluggish demand two months after operations resume, ICRA estimates that total domestic passenger traffic in FY2021 is expected to decrease by 41 to 46 percent.
Despite opening domestic business in the last week of May with a 33 percent capacity, demand has been subdued for the past almost 70 days, the report said.
The airlines had a significantly lower capacity utilization of 27 percent in July 2020 than in July 2019, which is a slight increase compared to the capacity used in June 2020 of 25 percent.
In July 2020, domestic passenger traffic was 20.6 lakh compared to 118.6 lakh in July 2019, a decrease of 83 percent over the previous year.
In June 2020, a sequential improvement of 4 percent compared to 19.8 lakh was recorded.
“The average number of passengers per flight during July 2020 was 86, as against an average of 134 passengers per flight in July 2019,” Kinjal Shah, Vice President, ICRA said in a statement.
“Thus, it is expected that the domestic aviation industry operated at a passenger load factor (PLF) of 55 per cent in July 2020, as against 86.3 per cent in July 2019, that too on a very low capacity. The PLF for July 2020 has sequentially moderated from 58 per cent in June 2020 due to the increase in capacity deployment by 11 per cent.”
“ICRA maintains that H2 FY2021 will witness some recovery, with Q4 FY 2021 witnessing YoY de-growth of just 3-14 per cent in domestic passenger traffic with improved PLFs, and overall FY2021 witnessing 41-46 per cent de-growth in domestic passenger traffic.”
On the airline industry’s main expense, the ICRA said August 2020 prices still remain lower by 30.5 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,” the statement said.
ICRA expects some recovery in the second half of fiscal 2016, with fourth quarter of fiscal 211 a 3 to 14 percent year-on-year decline in domestic passenger traffic with improved PLFs and total domestic passenger traffic growth of 41 to 46 percent.
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