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Indian Aviation – Recovery Is Still A Long Way Off

by Ajay Prakash

The Indian aviation industry remains severely affected due to the widespread pandemic in the country.  With new COVID-19 cases reaching a peak close to one hundred thousand (100,000) cases per day, domestic transportation services, both rail and air, remain badly curtailed.

Domestic flights were suspended on March 23 this year. Permission to gradually resume the services was given on May 25.

India’s domestic airlines facing the brunt of the pandemic – Photo Credit: Times of India

The government has been relaxing the COVID-19 restrictions to support the resumption of domestic air services. The Ministry of Civil Aviation in its order dated August 27, made relaxations for serving in-flight meals and also gave detailed instructions for sanitizing the aircraft after each flight.

Similarly, the Ministry of Home Affairs, in its order dated August 29 (Unlock 4.0) removed all restrictions of travelling within the country. However, people are still reluctant to fly as the pandemic is far from  contained.

Indian Airline Industry – A Bad Start to The Fiscal Year

On September 16, Ministry of Civil Aviation Hardeep Puri in a written reply to the Indian Upper House of Parliament (Rajya Sabha) stated that Indian airlines suffered an 85.7% revenue loss in the first quarter of 2020-21 when compared to the corresponding period a year ago.

The revenue dropped to  $500 Million (INR 36.51 Billion).

The Minister further reported –

The revenue of airport operators has reduced from $787 million (INR 57.45 billion) during April-June 2019 to $122 million (INR 8.94 billion) during April-June 2020. The employee count at airports has also reduced from 67,760 on March 31 to 64,514 on July 31.”

Passenger Traffic Yet to Pickup

Over the past five years, India’s aviation industry has grown rapidly. In 2018, the International Air Transport Association (IATA) forecast that India would be the world’s third-largest aviation market by 2024.

The Indian market would grow from 158 million passengers in 2017 and reach 572 million by 2037.

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Fig.1 – Annual Domestic Passenger Data – Source DGCA

The domestic passenger traffic has shown a compounded annual growth rate (CAGR) of thirteen per cent (13%) over the last three years. Figure 1 shows the Pre-COVID19 and Post COVID19 projected domestic traffic for the country.

By the end of this year, the total travelers in the country will be 50% lower than 2019 levels.

The Financial Year 2020-21 data may be even worse.

A Closer Look at the Monthly Trends

Let us examine the monthly data provided by the Director-General of Civil Aviation (DGCA) – India’s regulatory authority.

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Fig.2 – Comparing 2020 with 2019 – Data Source DGCA

Last year, 144.2 million passengers traveled on the domestic network. The traffic showed an increasing trend up to January this year. The monthly data that is shown in Figure 2 till August 2020 is the actual data, whereas the data shown in red bars (September to December 2020) are estimates.

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Fig.3 – Financial Year Q1 comparison – Data Source DGCA

This data corroborates the Minster’s statement, as the first quarter of this financial year was probably the worst in the history of Indian aviation. During this period only 2.2 million passengers traveled, compared to 35.2 million passengers last year — a drop in passenger traffic by ninety-four per cent (94%).

A Long Road To Recovery Ahead

IATA has forecast that airlines in the Asia Pacific region will be hard hit due to the pandemic. The losses are expected to be around $20 billion, which will be about one-third of the global losses of $84.3 billion. India based airlines mostly serve domestic passenger demand. These airlines will have their fair share of losses too.

IATA had stated that recovery in demand will take the next couple of years.

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© Air India

The domestic traffic will remain impacted due to the spread of COVID-19. Recovery and sustenance of airline company operations would be even more difficult because of the pandemic. Air India’s promotion “Lets Fly Again” very aptly sums up the mood of the Indian airlines.

Your views will be highly appreciated. Do write to us in the comments section below.

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Pankaj Sethi
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Pankaj Sethi

Airlines are in a soup. Only essential travel will be undertaken till there is some control on the disease via a vaccine or otherwise

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