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Analysis: A realistic estimate of when airline traffic can return to pre-COVID levels

Unless the cap on flights of airlines such as IndiGo, SpiceJet and Vistara is eased, a full recovery by the year-end seems unlikely for India's aviation sector

November 05, 2020 / 12:57 PM IST

Last week, aviation minister Hardeep Puri voiced his continued optimism about achieving full recovery in India's domestic civil aviation sector between Diwali and December of 2020. This hopeful prognosis comes amid two solid months of recovery in the aviation sector.

India's domestic airlines flew 51.56 lakh passengers in October, clocking 48,804 flights, according to data shared on the civil aviation ministry's Twitter handle.

The growth over the last two months has been phenomenal. September saw sequential growth of 40 percent while in October it was 31 percent. However, these numbers are still subdued compared with the corresponding months in 2019 — a year which itself was muted due to the suspension of Jet Airways.

So what will it really take to reach pre-COVID19 levels? And is that even possible?

Where do we stand today?


The air traffic in October 2020 mirrored that of November 2013. That month saw 51.37 lakh passengers take to the domestic skies. Interestingly, there are a few similarities there as well! Kingfisher Airlines had suspended operations a year ago and AirAsia India and Vistara were yet to take wing.

Passenger traffic chart - Ameya Joshi

As things stand today, the Indian government has capped fares —at both lower and upper ends—and extended this until the last week of February. There also remains a regulation which permits only 60 percent of schedules to be in operation by each airline. While the rule was envisioned to ensure social distancing at airports, there are airports which are well exceeding the 60 percent quota while many others are way below this quota.

By the number of departures, we are only at 55.77 percent of the count of domestic departures in February—the last full month of operations. However, the drop is steep in terms of passenger numbers. Even at the highest numbers clocked on the first day of November, the passenger traffic is only 48.42 percent of what it was in February.

How to read the trend 

A day-wise comparison of flights and passenger numbers has started to show a trend in October unlike the past months—an indication that airlines are better aware of the market and deploying capacity accordingly—in the absence of an ability to reduce prices to spur demand.

Industry body IATA has estimated that air traffic will return to pre-COVID levels only by 2024. This column had analysed and estimated that it would take the third quarter of the calendar year 2021 for traffic to be normal. However, a lot depends on the second and subsequent waves of COVID-19 and when a vaccine would be approved.

What is needed to achieve the target?

It won't be wise to look at the total domestic numbers pre-COVID and see if they match. The erstwhile numbers also include passengers who formed part of the connecting traffic from international flights, foreign tourists and businessmen amongst others. India is yet to allow scheduled foreign services, and as of now, 19 countries are being allowed to operate on a reciprocal basis under the “air bubble” agreement, with few more to follow soon. While the exact numbers would vary, this forms a substantial chunk - sometimes in excess of 20 percent—of air traffic for a network carrier.

Airlines have been operating around the 70 percent load factor mark currently and are expected to do well during the Diwali time. With lower load factors, reaching the pre-COVID-19 mark is even more difficult since it would take more flights to carry as many passengers. Yet, at the current threshold,  it would need double the flights to reach pre-COVID19 levels.

The first and foremost thing needed to achieve the target is a relaxation of the cap on flights. The announcement on Wednesday about a further extension of the cap does not bode well for the stated intention of returning to pre-COVID levels. We may recall that there was a spurt in the number of travellers after states started doing away with quarantine requirements as well as welcoming flights from other parts after removing all the curbs slowly.

The aviation sector doesn’t operate in isolation. Workstations, holiday plans, revenge tourism all play a part and are aiding air travel to some extent. However, the increased GST collections and manufacturing pickup are an indicator economy — GDP momentum usually translates to passenger uptick— is getting back on track and could, in turn, propel growth in the aviation sector.

While the minister is optimistic -- and he should be to ensure that his team looks up to a quick recovery, realistically it would still be Q3 of 2021 for air traffic to be normal. Yet, that means the recovery would still be faster than what other countries have seen.

(Ameya Joshi runs the aviation analysis website Network Thoughts.)
Ameya Joshi
first published: Nov 5, 2020 12:56 pm

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