Revising downwards its forecast, global aviation consultancy CAPA on Friday projected India's domestic air traffic at 5.5-7 crore for the current financial year citing structural damage and weakness of customer sentiment becoming more visible. The latest forecast is a sharp downward revision compared to the traffic of 8-9 crore passengers estimated earlier for the same period In the wake of the pandemic, the country is under lockdown till May 3 and commercial flight operations are also suspended.
"CAPA has revised its traffic projections downwards for FY2021 from our April 6 update. The estimate for domestic traffic has declined from 80-90 million (8-9 crore), to 55-70 million (5.5-7 crore), while international estimates are down from 35-40 million (3.5-4 crore) to 20-27 million (2-2.7 crore) as the structural damage and weakness of customer sentiment become more visible and forward bookings currently remain frozen," it said in a report.
Social distancing protocols would constrain airline capacity but demand in the second quarter is expected to be so weak in any case that it is unlikely that traffic would be much higher even if there were no restrictions, it noted.
According to the report, Indian carriers would need to re-align their fleet deployment plans with the expected levels of demand and estimated that the airlines would be operating around 265-300 aircraft in the domestic market and 80-95 on international routes in the second half of the current financial year.
"Indian aviation is expected to confront a series of challenges in the coming weeks and months, each of which could have a serious structural impact. The risks and implications are arguably under-estimated at a policy level," it said.
Further, the report said the first major test for the industry would be the Supreme Court decision on cash refunds as some carriers may need to organise funds to comply if the court rule in favour of passengers.
"If the imminent apex court ruling on passenger refunds goes against the airlines as is likely it could trigger the need to fund USD 300 million of domestic refunds," CAPA said.
A public interest litigation has been filed in the Supreme Court seeking directions to the Centre and the Directorate General of Civil Aviation (DGCA) to ask airlines to refund the full amount of the tickets that got cancelled in the wake of restrictions imposed to contain the COVID-19 pandemic. The court has sought responses from the Centre and the DGCA on the plea.