'Domestic air traffic crosses 10 mn in Nov; Omicron can derail recovery'

Demand continues to be subdued from the corporate traveller segment, says ICRA vice-president

Continuing on the recovery path, domestic air passenger traffic crossed the 10-million mark in November for the first time since the pandemic hit the aviation industry in March last year but the coronavirus' new variant Omicron has the potential to spoil the party, according to rating agency ICRA.

After recording 1.23 crore domestic passengers in February 2020, domestic air travel demand dipped to 19.84 lakh passengers in the first month (June 2020) of the resumption of flight services on the local routes after a two-month hiatus.

The recovery in domestic traffic continued till March this year when a more virulent second wave of the pandemic hit the country, resulting in domestic travel demand nosediving to 21.15 lakh passengers in May 2021.

In the second phase of the recovery, domestic travel demand rose to 10.04-10.05 million (1.004 crore-1.005 crore) in November 2021 as against 63.54 lakh passengers recorded in the year-ago period, registering a robust 64 per cent year-on-year growth, ICRA said in a statement.

The month-on-month growth, however, stood at 15-16 per cent in November over around 8.98 million passenger traffic in October 2021, ICRA said.

ICRA Vice-President and Sector Head Suprio Banerjee said, "Though the recovery continued in November, demand continues to be subdued from the corporate traveller segment as reflected by the passenger traffic being lower by around 19 per cent in November 2021 compared to pre-COVID-19 levels."

Moreover, the threat of the new variant, which has pushed the resumption of scheduled international operations, has the potential to derail the domestic recovery too, if it becomes a source of a fresh round of lockdowns/ restrictions in the near term, he added.

ICRA also said domestic carriers deployed 49 per cent higher capacity in the previous months vis--vis November 2020, logging around 80,750 departures in the month under review as against 54,132 departures in the year-ago period.

On a sequential basis, the number of departures in November was around 12 per cent higher as coronavirus infections demonstrated a downward trajectory, it said.

"For November, the average daily departures were at around 2,700, significantly higher than the average daily departures of 1,806 in November 2020, and higher than around 2,400 in October 2021," said Banerjee.

The average number of passengers per flight during November was around 129, against an average of 125 passengers per flight in October 2021, according to the rating agency.

One major concern that continues to worry the aviation sector is the aviation turbine fuel (ATF) prices, which have seen a sharp 67.3 per cent increase on a y-o-y basis till December 2021, which is mainly attributed to an increase in crude oil prices, ICRA said.

This, coupled with relatively low capacity utilisation of aircraft fleet, will continue to weigh on the financial performance of domestic carriers in FY2022, it stated.