Aviation sector remains on recovery path as domestic passenger traffic grows 37% in September

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The capacity deployment in September 2020 at 46% is a significant increase over the 33% capacity deployed in August 2020

The country’s aviation industry witnessed continued recovery in domestic passenger traffic in September 2020, with a sequential growth (over August 2020) of 37 percent to 39 lakh passengers, said a report.

The capacity deployment in September 2020 at 46 percent (vis-a-vis September 2019) is a significant increase over the 33 percent capacity deployed in August 2020, according to rating agency ICRA.

On a Y-o-Y basis however, domestic passenger traffic declined by 66 percent.

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 1,488 on Day 128 (September 28, 2020). For September 2020, the average daily departures were 1,311, significantly lower than the average daily departures of 2,874 in September 2019, though much better than 930 in August 2020.”

Shah said that the average number of passengers per flight during September 2020 was 98, as against an average of 133 passengers per flight in September 2019. Thus, it is expected that the domestic aviation industry operated at a passenger load factor (PLF) of 63% in September 2020, as against 85.5 percent in September 2019, that too on a low capacity.

“The PLF for September 2020 was similar to August 2020 despite the increase in capacity deployment by 37 percent. Overall, from May 25, 2020 till September 30, 2020, the domestic passenger traffic has been 11 million,” Shah said.

The Ministry of Civil Aviation (MoCA) permitted increasing the capacity to 45 percent 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.

It further permitted increasing the capacity to 60 percent with effect from September 2. This apart, through a circular dated August 27, 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 07, 2020, the international passenger traffic (inbound and outbound) has been 8,41,634 for the period May 07, 2020 to September 30, 2020. For September 2020, the number of international passenger traffic was 208,893, a Y-o-Y decline of 89 percent.

As for aviation turbine fuel (ATF) prices, following the pandemic outbreak, crude oil prices declined materially – reached a low of $19/ barrel in April 2020 thereby leading to a decline in ATF prices. However, the crude oil prices increased to around $ 42/ barrel.

Consequently, the ATF prices increased sequentially by 24.1 percent in July 2020 and by 4.2 percent in August 2020. However, it declined sequentially by 3.4 percent in September 2020 and by 5.6 percent in October 2020, which is also lower by 38.1 percent on a Y-o-Y basis.

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