Slow recovery ahead for aviation

According to CAPA India’s ‘Executive Summary of Mid-Year Outlook for Indian Aviation in FY2021’, domestic traffic is expected to be in the range of 30-40 million airline passengers in the second half of FY2021, approximately 50 per cent down year-on-year.

In the second half of FY2020, there were approximately 69 million domestic airline passengers. This is expected todecline by around 50 per cent year-on-year, driven primarily by a 60-80 per cent decline in business, M!CE and leisure travel. Domestic traffic in the second half of FY2021 is therefore expected to be around 30-40 million.

The projected traffic in the second half represents an average of around 160,000-220,000 daily passengers. Towards the latter part of the year or during peak periods, this could reach a maximum of around 250,000. With airlines expected to be willing to accept average load factors of 65-75 per cent, at the mid-range of this traffic forecastthis would require 250,000-300,000 daily seats, or a fleet of around 300 aircraft.

International travel is more constrained than domestic because even VFR traffic is subject to border and capacity restrictions. Although foreign business travellers and OCI holders are once again permitted to enter the country, India remains closed to leisure visitors, VFR travellers (unless they are NRIs or hold OCIs) and medical tourists. Only 60 per cent of the pre-COVID traffic is actually allowed to enter the country from a border control perspective, of which the majority is expected to defer travel given the risks and inconvenience associated with international travel at present.

Similarly, in the case of outbound travel, discretionary business and leisure travel accounts for an estimated 56 per cent of total departures, and these segments are likely to see limited activity. VFR, employment and education accounts for around 44 per cent of traffic and may be slightly less impacted, but here, too, CAPA estimates that demand may be down by up to 70 per cent.