For Indian aviation, best-ever April clears the runway for a bumper summer

The industry crossed the average daily traffic of February 2020 for the first time since scheduled services restarted after the Covid-19 pandemic.

As the curtains drew in April, there is reason for the Indian aviation industry to rejoice. Firstly, the industry crossed the average daily traffic of February 2020 for the first time since scheduled services restarted after the Covid-19 pandemic.

February 2020 was the last full month of operations before the pandemic forced a lockdown and subsequent challenges kept passengers away for a long time. Secondly, this is the best-ever April in the history of the domestic market in India.

The last day of April witnessed the best-ever single-day traffic in history with 4.56 lakh passengers taking to the domestic skies in India. This helped close the month with 1.28 crore passengers, shows data released by the Ministry of Civil Aviation on its website. The Directorate General of Civil Aviation (DGCA) consolidates this data with revisions and publishes it later in the month.

April ― the beginning of summer

Traditionally, two quarters rule the roost in the Indian skies. The April to June quarter is driven by summer holidays and family trips, and the October to December quarter is driven by festivities. April remains on the cusp ― a mix of travel picking up and the end of exams, and this year has not been any different. It is heartening to see it this way since it is after a long hiatus that the traffic cycle is coming back to normal.

This April, there were two peaks that drove traffic to new highs. The first was the long weekend beginning with Good Friday, and the second was the weekend starting on the last day of April and ending on May Day (Monday). In the end, April saw 9,500 additional passengers per day, compared to March. The average number of passengers per day reached 4,28,778, beating the February 2020 average of 4,25,179 ― the first such instance since the restart of civil aviation in May 2020.

April 2023 Vs the previous ones

Not only has this April put the pre-Covid numbers behind, but it has also turned out to be the best April in history for India’s aviation sector. The data available with DGCA since 2014 shows that the highest-ever passenger numbers in April were recorded in 2018 at 1.15 crore. While year-on-year (YoY) numbers go up, April 2019 saw the demise of Jet Airways, leading to a blip in passenger growth in India. By the time the industry recovered, the pandemic had struck, with April 2020 going under lockdown without any traffic.

Just when it seemed like the industry would do well the next year, the deadly second wave kept everyone grounded in 2021.

Passengers in April (in Lakhs)

A recovery, in the true sense, started only in 2022. And hopefully, this strong recovery will head to a pinnacle in May this year, after a never-seen-before April.

Will aviation flay back into the black?

India’s aviation sector has been characterised by two things ― very high growth, and high losses, leading to a lot of skeletons tumbling out of various cupboards. Just when the recovery started in passenger numbers, a war in Europe threw a spanner in the works.

Multiple factors kept the aviation sector on tenterhooks. The Russia-Ukraine war resulted in high oil prices, which impacted airfares. This was accompanied by a shortage of capacity, a falling rupee, and increased costs of aircraft leasing for Indian airline companies. This is because almost the entire fleet in the country is leased, and the lease payments are dollar-denominated. A weakening rupee, in this case, hurts the airline companies.

However, even with high airfares, passenger recovery has been strong, with airlines reporting high load factors. So, will this translate into profits for airline companies? The next few weeks will provide the answer to this question. However, if a cycle of high airfares, highest-ever revenues, and considerably lower unit costs cannot help achieve profits for airlines, one wonders what structural changes would be needed to get airlines back in the black.

Capacity constraints

The high airfares are also a function of the low capacity in the market. Quite a few players are impacted by capacity issues, both in terms of shortage of crew, and engines. On the engines front, the Pratt & Whitney-powered A320neo aircraft of IndiGo and Go FIRST have been grounded, which led to between 40 and 60 aircraft being put out of service. Both airlines have not gone public with the compensation details, but this significant capacity cut, along with the shrinking of SpiceJet, has meant that India’s fleet size is now effectively smaller than in the pre-pandemic days.

From an environment where airlines were adding capacity and selling cheap fill-up planes, to facing a shortage of seats and selling at high fares, the aviation sector has come a full circle. Will this help airline companies learn a lesson for the future in capacity management?