Domestic air travel in April 2022 only ~5% lower than pre-Covid levels: ICRA

Post the waning of Covid-19 infections, domestic passenger traffic has grown ~83% on Y-o-Y basis to ~10.5 million ~ in April 2022 and is only ~5% lower compared to ~11.0 million in April 2019 (pre-Covid level). The airlines’ capacity deployment for April 2022 was ~36% higher than April 2021 (81,777 departures in April 2022 against 59,967 departures in April 2021). On a sequential basis, the number of departures in April 2022 were higher by around 2%, given the near normalcy seen in business operations. However, sequentially, the domestic passenger traffic in April 2022 was almost flat compared to ~10.7 million in March 2022.
 
As per a recent report published by ICRA on Aviation industry,  Suprio Banerjee, Vice President & Sector Head, ICRA said, “For April 2022, the average daily departures were at ~2,726, notably higher than the average daily departures of ~2,000 in April 2021, and higher compared to ~2,588 in March 2022. The average number of passengers per flight during April 2022 was at 128, against an average of 133 passengers per flight in March 2022 and lower than an average of 135 passengers per flight in April 2019. Though recovery in passenger traffic is expected to be relatively fast paced in FY2023, given the near normalcy situation seen in domestic airline operations, overhang of any further Covid wave looms on the sector. Elevated ATF prices aggravated by geo-political issues will remain a near term challenge for the industry and will continue to weigh on the profitability of Indian carriers.”
 
With resumption of scheduled international operations since March 27, 2022 and reversion to bilaterally-agreed capacity entitlements, the international passenger traffic for Indian carriers in April 2022 surged to ~1.85 million, which also marginally surpassed the international passenger traffic of ~1.83 million witnessed in April 2019 (pre-Covid level).
 
ATF prices have surged by ~89% on a Y-o-Y basis in May 2022 given the elevated crude oil prices, due to geo-political issues arising from the Russian invasion of Ukraine. The rising ATF prices will pose a serious threat to the industry earnings in FY2023. On an aggregate basis, return to normalcy will lead to recovery in passenger load factors, which in turn will aid revenues; however, elevated ATF prices will continue to weigh on the earnings of Indian carriers in FY2023.