After a catastrophic spell of over six months, the Indian airline industry is pinning its hopes for a revival with the upcoming festive season starting next month. However, prospective flyers are still unsure whether they would want to take the risk given that the number of positive Covid-19 cases have been soaring across the country. Since the resumption of domestic flights by the Central government in June, passenger demand has not significantly picked up.
Earlier this month, Wolfgang Prock-Schauer, president and chief operating officer of IndiGo said, “We can see a gradual improvement in passenger load factor (PLF). Also, fares are holding on and slightly higher fares and improvement in PLF will lead to an improvement in RASK."
PLF measures the capacity utilization of airlines. On September 2, the Centre had extended the capacity cap of 45 per cent imposed on domestic flights to up to 60 per cent.
“We are expecting the demand will rise as more people would want to travel to their hometowns and to their families in the coming months. Given the current pandemic, people may prefer taking flights as that would reduce the travel time significantly," said a top official who did not wish to be named.
According to a report by aviation consultancy firm CAPA India, the airline industry is expected to report a consolidated loss of USD 6-6.5 billion in the current financial year. The airline industry is one of few industries that saw demand fall by more than 90 per cent within weeks of the global spread of the pandemic in March, Moody’s Investors Service said. The strain on the industry’s previous fundamentals is (and will continue to be) felt across a broad swath of the global economy well into 2022 and beyond, it added.
Passenger airlines supported about three per cent of the world’s GDP in 2019, according to the International Air Transport Association (IATA). Airline cargo operations materially bolster international trade with the movement of goods worth over 5 trillion dollars across supply chains last year.
Some broad categories of activities for which airlines incur significant costs either directly (labour, jet fuel) or through outsourcing (airport services, maintenance and repair) along with a host of required services (air traffic control, airport charges) will be significantly affected for at least the next three years, said the report.
Indian carriers posted a 25 per cent sequential rise in domestic passenger traffic in August from July, though it plunged 77 per cent from the year-ago period because of covid-19 disruptions, rating agency ICRA said in a report.
Latest data from the Directorate General of Civil Aviation (DGCA) showed domestic air traffic in July grew to 2.1 million, slightly more than June’s 1.98 million passengers. However, the much-awaited festive season may not be as profitable as one would expect.
According to a survey by LocalCircles, less than 20 per cent of people plan to travel during the October-November period. Moreover, the majority of those having travel plans said that they do not want to make their bookings till they get closer to their travel date.
The survey was conducted to understand how people in India are planning to travel in the upcoming festive season, given the current situation with Covid-19. The survey received over 25,000 responses from people located in 239 districts of India, according to the online platform.
“Only 19 per cent citizens (respondents of the survey) say they will undertake festive travel this year due to Covid-19. Of those who plan to travel, only 23 per cent say they will travel by a flight and another 38 per cent plan to travel by car or a cab," the survey revealed.
In the first question, citizens were asked about the kind of travel they plan to undertake in the upcoming festive season between October-December. “As many as 69 per cent respondents said that they will not be travelling this year and would stay at home," says the survey.
According to LocalCircles, each year, August and September receive high travel bookings in India with Durga Puja, Dussehra, Diwali and Chhath festival, all falling in October-November. The Unlock 4.0 came into effect on September 1 with quarantine restrictions now removed by most states, many continue to be cautious and unwilling to travel, it added.