Domestic air traffic up 31% in August on higher capacity deployment: Icra

The ratings agency said despite the continued recovery, there is continued stress on demand, driven largely by the second wave of the pandemic, limiting travel to only necessary travel

Domestic air passenger traffic continued on the growth trajectory in August with volumes growing up to 31 per cent to 66 lakh over the previous month, helped by higher capacity deployment and a downward trend in the pandemic, credit ratings agency ICRA said on Monday.

The domestic passenger traffic in August 2020 was 51 lakh, ICRA said in a release.

Domestic passenger traffic on a year-on-year basis, however, spiked around 131 per cent over August 2020 traffic of 2.83 million passengers, it said.

The ratings agency said despite the continued recovery in the previous month, there is continued stress on demand, driven largely by the second wave of the pandemic, limiting travel to only necessary travel.

"The air travel demand has continued to register improvement and the same grew by around 30-31 per cent at around 65-66 lakh in August, compared to around 50.1 lakh in July 2021, signifying a y-o-y growth of around 131 per cent," Kinjal Shah, Vice President and Co-group Head for Corporate at ICRA, said.

The airlines' capacity deployment for August 2021 was around 99 per cent higher at around 57,500 departures, as against 28,834 departures in August 2020, Shah said, adding that on a sequential basis, the number of departures in August 2021 were higher by around 22 per cent, as Covid-19 infections demonstrated a downward trajectory.

"For August 2021, the average daily departures were at around 1,900, significantly higher than the average daily departures of around 900 in August 2020, and higher than around 1,500 in July 2021, though it remains lower than around 2,000 in April 2021," Shah said.

The average number of passengers per flight during August 2021 was 114, against an average of 106 passengers per flight in July 2021, she said.

Though the recovery continued in August 2021, there is continued stress on demand, driven largely by the second wave of the pandemic, limiting the demand to only necessary travel, while both leisure and business travel have been curtailed due to various state-wide restrictions, despite the decline in infections, she said.

The Civil Aviation Ministry permitted increasing the capacity deployment on domestic routes, gradually from 33 per cent, with effect from May 25, when domestic travel resumed after the first wave last year, to 80 per cent, with effect from December 3, 2020.

However, it reduced the permissible capacity deployment to 50 per cent of pre-Covid levels, with effect from June 1, 2021 due to the resurgence of the second wave of the pandemic.

It had again increased the permitted capacity to 65 per cent with effect from July 5, which has subsequently been increased to 75.2 per cent from August 12 this year, Icra said.

In addition, the ministry has also increased the minimum and maximum fare band by 10-13 per cent for domestic flights with effect from August 12, 2021 until August 31, 2021.

"In ICRA's view, the price increase may not materially impact the passenger traffic demand as in the current scenario, travel is limited to only necessary travel while both leisure and business travel have been curtailed due to various state-wide restrictions and the spread of the infections. However, it will allow airlines to recoup some part of the increase in jet fuel prices, thereby cushioning some impact on the airlines' losses, it stated.