'FY21 likely to see de-growth in domestic air passenger traffic'

New Delhi: Domestic air passenger traffic is likely to witness a de-growth by 41-46 per cent during 2020-21, rating agency ICRA said.

The rating agency said the domestic airlines witnessed a rather slow uptick in capacity in July 2020 despite recommencement of operations over two months ago.

Accordingly, airlines operated at a much lower capacity at 27 per cent in July 2020 vis-a-vis their July 2019 capacity, which was a marginal increase over the 25 per cent capacity deployed in June 2020.

In July 2020, the domestic passenger traffic was 20.6 lakh, as against 118.6 lakh in July 2019, a Y-o-Y de-growth of 83 per cent.

The domestic passenger traffic witnessed a sequential improvement of 4 per cent over 19.8 lakh in June 2020.

Officially, the Ministry of Civil Aviation (MoCA) has permitted increasing the capacity to 45 per cent with effect from June 27, 2020, post the initial recommencement of operations of the scheduled domestic flights with effect from May 25, 2020 to a limited

extent.

"The average number of passengers per flight during July 2020 was 86, as against an average of 134 passengers per flight in July 2019," Kinjal Shah, Vice President, ICRA said in a statement.

"Thus, it is expected that the domestic aviation industry operated at a passenger load factor (PLF) of 55 per cent in July 2020, as against 86.3 per cent in July 2019, that too on a very low capacity. The PLF for July 2020 has sequentially moderated from 58 per cent in June 2020 due to the increase in capacity deployment by 11 per cent."

"ICRA maintains that H2 FY2021 will witness some recovery, with Q4 FY 2021 witnessing YoY de-growth of just 3-14 per cent in domestic passenger traffic with improved PLFs, and overall FY2021 witnessing 41-46 per cent de-growth in domestic passenger traffic."

On the airline industry's main expense, the ICRA said August 2020 prices still remain lower by 30.5 per cent on a Y-o-Y basis.

"The prolonged shutdown of manufacturing activities in several countries and the subsequent impact of the outbreak on the global economic activity will keep the crude oil prices and thus the ATF prices low," the statement said.