Air traffic crawls towards normalcy amid restrictions

by Manasi Swamy

Domestic air traffic, which was completely missing from India’s recovery story has, finally joined the bandwagon. According to data released by the Ministry of Civil Aviation (MOCA), about 205,000 passengers boarded flights in India on November 1, 2020. This is over 50 per cent of the pre-Covid level. About 350,000-400,000 passengers used to travel by air daily within India before the Covid-19 pandemic hit the country. This translates into a monthly passenger handling of 2-2.5 million by the domestic airports as one passenger touches at least two airports.

The aviation sector still lags its transport sector peers in terms of recovery because of the restrictions imposed on air travel by the government. While the restrictions continue to be in place, the aversion for travel developed in passengers due to Covid-19 risk seems to be fading away. This is evident from the fact that both airlines and passengers have started fully utilising the space made available by the government.

Domestic flights were suspended by the government with effect from March 25, 2020 in order to arrest spread of Covid-19. After a two-month hiatus, domestic passenger flights resumed operations on May 25, 2020. Airlines were permitted to operate only at 30 per cent capacity due to social distancing needs. The response from travellers was even pale. Despite a permission to operate at 30 per cent capacity, domestic passenger traffic remained 83.5 per cent lower than its year-ago level in June 2020. The cap was enhanced to 45 per cent with effect from June 26, 2020. Yet, passenger traffic remained 82.6 per cent below its year-ago level in July 2020 and 75.8 per cent in August 2020 as travellers continued to be cautious.

The cap on airlines’ operations was further revised to 60 per cent with effect from September 2, 2020. This time, passenger movement improved significantly despite rising Covid-19 infections as people started adjusting to the new normal. Domestic passenger traffic averaged 65.1 per cent below its year-ago level in September 2020. With passenger traffic alleviating the year-on-year fall to less-than 50 per cent by November 2020, and expectations of a further pick-up in demand due to the festival season, the Ministry of Civil Aviation has decided to relax the cap further to 70-75 per cent of normal capacity in the coming days.

International passenger traffic, which traditionally accounts for a fifth of the passengers handled by Indian airports, remained 87.8 per cent below its year-ago level in September 2020. The Indian government suspended scheduled international passenger flights from March 23, 2020.

The international passenger movement has since been mainly concentrated to the ‘Vande Bharat’ mission launched by the government on May 5, 2020. Under this mission, the government operates special international passenger flights to repatriate people to and from India. The government also formed bilateral ‘air bubble’ arrangements with 18 countries under which airlines could operate special international flights between their territories from July 2020. But, these operations have been quite small. During April-September 2020, less than 2.4 million international passengers touched Indian airports, while the total number of passengers repatriated under the ‘Vande Bharat’ mission till November 1, 2020 were over a million. The Air India Group operated 8,100 flights under the mission, of which 4,048 were inbound flights which carried 654,487 passengers to India, and 4,052 were outbound flights which carried 390,676 passengers out of India.

The ban did not apply to cargo traffic. Yet, international cargo traffic, at 618,300 tonnes, during April-September 2020 remained 40.3 per cent below its level in the corresponding months of 2019. International trade, particularly of high valued and perishable goods, remained weak during this period in the backdrop of the pandemic. During April-September 2020, exports of jewellery, floriculture items and fruits, which are transported as air cargo, declined y-o-y by 55.2 per cent, 17.4 per cent 17.1 per cent, respectively. Imports of gold, electronics, fresh vegetables, fruits also suffered a 57.8 per cent, 23.1 per cent, 59.9 per cent and 13.4 per cent y-o-y contraction during this period.

Domestic cargo traffic during April-September 2020, at 322,900 tonnes, was 52.3 per cent lower than its year-ago level. Nonetheless, the y-o-y contraction in both, domestic and international cargo traffic has been narrowed sequentially from 92.4 per cent and 78 per cent in April 2020 to 20 per cent and 13.6 per cent, respectively, by September 2020.

While the aviation industry continues to crawl up on its recovery path, it can return to near-normalcy only after the government fully lifts the restrictions imposed on the domestic passenger carriers and opens the country’s skies to scheduled international passenger flights.

CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
6.8 +2.1
Consumer Sentiments Index
Base September-December 2015
51.8 +0.3
Consumer Expectations Index
Base September-December 2015
53.6 0.0
Current Economic Conditions Index
Base September-December 2015
48.9 +0.9
Quarterly CapEx Aggregates
(Rs.trillion) Dec 19 Mar 20 Jun 20 Sep 20
New projects 5.56 4.02 0.78 0.82
Completed projects 1.67 1.78 0.25 0.69
Stalled projects 0.61 0.73 0.11 0.08
Revived projects 0.82 0.42 0.68 0.36
Implementation stalled projects 0.13 10.04 0.09 0.05
Updated on: 05 Dec 2020 3:28PM
Quarterly Financials of Listed Companies
(% change) Dec 19 Mar 20 Jun 20 Sep 20
All listed Companies
 Income -1.7 -5.0 -27.6 -6.2
 Expenses -2.2 -1.9 -27.9 -10.1
 Net profit -10.9 -48.2 -40.2 45.3
 PAT margin (%) 5.1 2.4 5.3 8.3
 Count of Cos. 4,459 4,316 4,300 4,204
Non-financial Companies
 Income -5.5 -9.0 -37.4 -10.3
 Expenses -6.4 -5.0 -37.6 -14.0
 Net profit -13.9 -49.4 -55.7 30.1
 PAT margin (%) 5.7 3.3 4.5 8.1
 Net fixed assets 13.3 6.0
 Current assets 3.0 0.7
 Current liabilities 5.8 -2.9
 Borrowings 15.6 8.1
 Reserves & surplus 1.4 4.5
 Count of Cos. 3,311 3,229 3,220 3,163
Numbers are net of P&E
Updated on: 05 Dec 2020 3:28PM
Annual Financials of All Companies
(% change) FY18 FY19 FY20
All Companies
 Income 8.4 13.4 0.3
 Expenses 9.9 13.7 0.9
 Net profit -40.6 22.1 -19.9
 PAT margin (%) 2.0 2.3 4.1
 Assets 10.9 9.5 9.3
 Net worth 7.5 8.6 5.0
 RONW (%) 3.4 4.2 5.9
 Count of Cos. 28,469 27,687 7,454
Non-financial Companies
 Income 8.6 14.0 -2.8
 Expenses 8.8 14.1 -1.7
 Net profit -9.2 23.2 -28.6
 PAT margin (%) 2.7 3.1 4.3
 Net fixed assets 7.2 5.5 13.0
 Net worth 6.1 8.4 1.9
 RONW (%) 5.6 6.8 7.3
 Debt / Equity (times) 1.0 1.0 0.8
 Interest cover (times) 2.1 2.4 2.8
 Net working capital cycle (days) 77 70 58
 Count of Cos. 23,112 22,440 5,526
Numbers are net of P&E
Updated on: 05 Dec 2020 2:43PM