Domestic air passenger traffic grew by almost 6% month-on-month in December but the emergence of the new virus variant and travel curbs by State governments pose a near-term threat to the recovery, noted ICRA.
IndiGo on Sunday said it would cancel 20% of its flights due to a drop in travel demand and a rise in booking cancellations. Government data also shows that domestic traffic shrank by 16% in the first week of January as compared with the same time last month. The downward trend comes after consistent growth in the last few months.
In December, airlines flew a total of 111 lakh passengers, up from 105 lakh passengers in November, said ICRA.
The average daily departures last month stood at almost 2,800, up from 2,700 in November and 2,065 in the year-earlier period, when airlines had been under capacity restrictions due to the COVID-19 pandemic.
More headwinds
“Though sequential recovery continued in December 2021, largely driven by leisure travel, boosted by calendar year-end festive and holiday travel, demand continues to remain subdued from the corporate traveller segment, as reflected by the passenger traffic for nine-month FY22 which is nearly 44% lower than nine-month FY20,” said Suprio Banerjee, Vice President and sector Head, ICRA Limited.
The cost of aviation turbine fuel, which had increased by 49% on a year-on-year basis till January, would continue to weigh on the financial performance of Indian airlines, especially given that travel demand had once again begun to shrink, the ratings agency observed.
