Why the muted air-passenger traffic growth in January wasn't all that bad

As December came to a close, the passenger numbers in domestic skies were far from the hype that was created around the “recovery by end of the year” phenomenon. Even the Economic survey took note of this and says the aviation recovery will be in early 2021.

In fact, a look at the numbers shows that while the absolute numbers are increasing, the growth curve is flattening. August and September of 2020 saw growth of 34 percent and 39 percent, respectively, while the growth percentage came down to 22 percent, 20 percent and 15 percent in the subsequent three months. As January came to a close, growth was down to 3 percent.

The year 2020 was unprecedented and took India back by only seven years as compared to over a decade for most countries. The first seven days of January recorded the same number of passengers as the first seven days of December, leading to alarm bells ringing across airlines.

The first half of the month saw growth of only 3 percent over the same period in December. The month closed at 3.51 percent over the previous month. While the numbers are just 60 percent of what the last January was, this is the best performance when it comes to traffic numbers in January over December, in a clear indication that there continues to be a steady rise.

What do the numbers say?

It is often said that statistics hide more than they reveal and thus it is important to look at all the numbers holistically before making a conclusion on growth. Data analysis for the last seven years shows that passenger traffic in January has always struggled to catch up with the numbers in December.

Even when each year was recording 20 percent growth, at best the January numbers matched the preceding December or were up to 3 percent lower.

Compared to this, January 2021 saw growth of 3.51 percent over December 2020. This is the highest growth in the last seven years that January has seen over the preceding month.

In January 2017 and 2018, when the industry was growing at a phenomenal rate of 20 percent every month, January would see passenger traffic at best match the numbers for December or decline 2 percent.

Globally, aviation is cycling. While Europe and the US have clear high and low seasons, India has two quarters of good traffic. The April-June quarter is characterised by summer holidays for schools, leading to travel to the hills, while the October-December quarter is characterised by festivals and small breaks that see people travel to beach destinations.

Over the years, the destination-specific traffic has changed but the two quarters of good traffic remained steady. The January-March quarter is the exam season, while the July-September quarter is the monsoon season in the country.

With the Christmas holidays coming to an end at the beginning of the new year, the multiple-public-holiday month comes to an end with January at best offering a holiday on Republic Day, spiking travel if it happens to be a long weekend.

What is different this time?

The transition this year is unlike any other. Traditionally, the industry transitions to a new year with a record high for the previous year. However, with the pandemic raging, passenger traffic is at 60 percent of what it was pre-Covid and capacity has been capped at 80 percent.

While each year a cycle follows, this time around, the traffic is gradually coming back. This is not cyclical but incremental and while it may be the lowest sequential growth since August, it actually is a very good growth compared to the past.

February 2020 was the last full month of operations before India and the world came to a standstill due to Covid-19. Sequential growth will be a challenge with three days less than January coupled with the partial closure at Bengaluru due to Aero India for the first few days of the month. While January might have done well in isolation, the industry is still considerably some distance from a total recovery.