Forget aviation recovery, air traffic may instead fall by the end of this fiscal year

The government had recently lifted restrictions on domestic flights, however, international flights are still under a ban till 31st July 2020.

While the government has eased restriction on flying, the same may not translate into recovery for the aviation industry in FY21. “Though restricted recommencement of domestic air traffic has begun, this will in no case help the industry to recover the lost ground in FY2021,” a report by ICRA said on Friday. By the last quarter of the current fiscal year, the aviation industry is likely to report a de-growth of 3-14% in domestic passenger traffic, the report added. The government had recently lifted restrictions on domestic flights, however, international flights are still under a ban till 31st July 2020.

Since international travel is still banned, the impact on international travel will be even more profound with Indian carriers likely to witness a significant on-year degrowth of about 70%. However, by the end of Q4 of the current fiscal, the on-year de-growth will be around 30-40%. The government had suspended all flight operations a day after the nationwide lockdown was imposed as it raced to contain the spread of the coronavirus. Since then, domestic services restarted on 25 May 2020. Even then, only one-third of the respective approved capacity of summer schedule 2020 is operational.

The scheduled international operations are expected to recommence only when the domestic traffic reaches 50% and all stakeholders like airports and State Governments are ready to expand, the report said. Meanwhile, the government has capped the airfares till 24 August 2020 to ensure that the airlines do not overcharge passengers.

The aviation industry all across the globe had suffered due to the sudden flight restrictions and several industry reports had predicted that most airlines will go bankrupt if the coronavirus situation persists. In India, the lockdown had started to crack up airlines with major airlines announcing pay cuts for their employees. On the other hand, several international airlines also had to let go off their employees as revenues dried up.