A resurgence of Covid-19 infections across the country -- especially in Mumbai and Delhi, which account for 36 per cent of overall air traffic – is expected to stall the recovery seen over the past six months. In fact, average daily domestic passenger air traffic fell in April by over 15 per cent to around 235,000 compared to February.
“Domestic traffic fell 85 per cent in the first half of last fiscal due to lockdowns and restrictions on operations. Despite the second wave-induced fresh curbs, which will temper recovery, domestic traffic in the first half of this fiscal is likely to be 3.5-4 times higher on-year, on a low base. The second half should see good recovery in traffic, supported by acceleration in the vaccination drive and people gradually taking to travel after prolonged stay at home,” said Gautam Shahi, director of Crisil Ratings.
A gradual recovery in international operations in the second half of fiscal 2022 will also boost traffic. However, airlines have also seen their cost of operations spurt due to a rise in the price of aviation turbine fuel (ATF), a key cost head for them. The price, which remained low until November 2020, limiting their losses, has shot up 30 per cent since then. This will offset the benefits from some of the initiatives the carriers undertook to reduce cost – employee costs, rentals, etc. – last fiscal, and which are being carried forward into the current fiscal.
Fluctuations in crude oil price, foreign exchange rates, prolonged impact of the second wave on domestic traffic volume, and the pace of recovery in international travel, which is more lucrative, will be key monitorables, Crisil said.
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