Domestic air passenger traffic grows 2-3% to about 6.9 mn in Sept: Icra

India's domestic air passenger traffic grew marginally 2-3 per cent at around 69 lakh in September as compared to around 67 lakh in August, credit ratings agency Icra said in a release on Wednesday.

The local carrier operated higher capacity at 54 per cent in September 2021 over the same month last year.

Compared y-o-y, air passenger traffic growth stood at around 74 per cent in the month under review over September 2020, it said.

Airlines witnessed around 61,100 departures in September as compared to 39,628 departures in the same month of 2020, it said, adding that on a sequential basis, the number of departures in the month gone by were higher by around 6 per cent, as Covid-19 infections demonstrated a downward trajectory.

"For September 2021, average daily departures were at around 2,100, significantly higher than the average daily departures of around 1,321 in September 2020, and higher than around 1,900 in August 2021, though they remained lower than around 2,200 in January 2021," said Suprio Banerjee, Vice President and Sector Head, Icra.

The average number of passengers per flight during September was 113, against an average of 117 passengers per flight in August. Though the recovery continued in September, demand continues to be subdued from the corporate traveller segment as reflected by passenger traffic being lower by around 38 per cent in September compared to pre-Covid levels, he said.

The Civil Aviation Ministry reduced the permissible capacity deployment to 50 per cent of pre-Covid levels, with effect from June 1, due to the resurgence of the second wave of the pandemic.

It had increased this capacity to 72.5 per cent with effect from August 12, which has now been increased to 85 per cent with effect from September 18 until further orders.

Additionally, effective September 18, the ministry relaxed the fare cap rule wherein the fare caps in each of the bands will be applicable up to next only 15 days on a rolling basis, implying that the minimum and maximum fare chargeable will continue to be rolled over for the next 15 days cycle compared to 30 days earlier.

In Icra's view, the increase in permitted capacity to 85 per cent levels is a step in the right direction, given the onset of the festive season, the ratings agency said.

Also, reduction in fare cap roll over period from 30 days to 15 days is a move towards market driven pricing as applicable during the pre-Covid period, wherein the pricing was determined by the actual demand-supply dynamics and real passenger load factors, it added.

Icra said that aviation turbine fuel (ATF) prices have seen a sharp increase of 78.6 per cent on a Y-o-Y basis till October 2021, attributed to increase in crude oil prices, this coupled with low capacity utilisation of aircraft fleet will continue to weigh on financial performance of Indian carriers in FY'2022.

Furthermore, the credit profile of most Indian carriers continues to be characterised by a weak liquidity position, it added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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