Indian Aviation Recovery Put on Breaks

by Ajay Prakash

The Indian aviation industry is again on the backfoot. The progress made towards reaching pre-COVID flight levels during the first couple of months of this year has all but been lost.

In another downgrade of services, the Ministry of Civil Aviation (MoCA) yesterday ordered that the flight capacity be capped back to fifty percent (50%) of the pre-COVID levels. In addition, MoCA permitted the airlines to increase the airfares by fifteen percent (15%). This order will come into effect on June 1, 2021, and remain in force till July 31, 2021.

You may recall the Indian government had gradually increased the flight capacity from a low of thirty-three percent (33%) in May 2020 to eighty percent (80%) in December last year.

Air India Crew during COVID

Air India Crew being felicitated during pandemic. Photo Twitter HS Puri

Air Fare Regulations

Similarly, the Ministry has been regulating airfares since May 2020. The minimum and maximum chargeable fares have been capped based on flight duration. For instance, for a two-hour Delhi Mumbai flight, the government permits a minimum return fare of INR 7800. However, due to lack of demand, spot fares are being sold well below the minimum. According to Times of India, on Friday, the cheapest return fare for travel the next day trip on this sector was being sold at INR 5900. The permitted increase in the cap may not significantly increase airline revenues if the demand does not pick up in the coming weeks.

Passenger Traffic

Indian Aviation Passenger Traffic Jan to April

The annual domestic passenger traffic in India before the pandemic was about 144 million, an average of 12 million a month. During 2020, the passenger traffic fell to 63 million – a fifty-three (53%) percent drop. The first four months of 2021 saw passenger traffic of only 29 million.

In the first three months of the current year, the domestic passenger traffic was averaging about 7.8 million. In April, the traffic dropped to 5.7 million. Likely, the May figures may even be lower. The drop in traffic prompted the government to decrease the capacity.

Indian Aviation Recovery Tweet by Minister

Tweet by Minister of Civil Aviation May 25, 2021

The Minister of Civil aviation, Hardeep Singh Puri, remains hopeful that as more people get vaccinated, they will take to the skies again.

As always, we appreciate your comments.

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AG MUTHUKUMAR
AG MUTHUKUMAR
2 months ago

It is a very paradoxical situation – a trade off between Covid spread and economy ; in this case passenger traffic. Cathay Pacific was given a huge amount by the HK GOVT to tide over the crisis and not resort to layoffs. Can and will the Indian govt do it?

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