India’s civil aviation sector is in severe difficulty once more, having encountered an air pocket just as it appeared to be ready to take off after a tumultuous year.
Things began to improve, and pre-pandemic levels of business appeared to be on the horizon, but just as the government announced that it would consider allowing airlines to operate at full capacity if passenger numbers exceeded 3.5 lakh per day three times in a month, the number began to decline.
As the second wave of the pandemic raced across the country, notably in key air traffic hubs such as Mumbai, Delhi, and Bengaluru, the passenger count never exceeded 3 lakh in March, and in April, the number began to decline even further, in tandem with escalating COVID-19 cases.
The number of passengers dropped from 2.75 lakh in early April to slightly over 1 lakh by the month’s conclusion. According to ICF’s data analysis, the number of active COVID-19 instances in India increased by 394 percent while traffic decreased by half. Airlines were further harmed because not all flights were cancelled at the same time. Even while traffic was dropping at a considerably quicker rate, the daily flight count fell only 35%, putting further strain on the carriers’ budget.
Who shrunk the most while who held up?
GoAir, which is preparing for an IPO, and AirAsia India, which is controlled by Tata-AirAsia Bhd, were the first to react to the shifting market. From 201 at the beginning of the month, GoAir’s departures dropped by 62% to 77 on April 30. AirAsia’s headcount has dropped from 161 to 55 in the last month.
IndiGo, India’s largest carrier in terms of fleet and domestic market share, shrank by only 28% on April 30, flying 883 flights. According to ICF data, the airlines concluded the month with 31,516 departures, which was more than the entire competition combined, or 52 percent of total domestic departures in the country in April.
Air India, the country’s national carrier, declined the least among major airlines, cutting its operations by only 11%, while Alliance Air, a subsidiary, cut a fourth of its operations by the end of April. Trujet, situated in Hyderabad, has also shrunk by 11%. Trujet and Alliance Air both have a significant presence in RCS-UDAN, and viability gap funding would help to mitigate the effects.
Between the first and last days of April, SpiceJet and Vistara both shrank by 47 percent and 46 percent, respectively.
Where was the impact felt?
While Mumbai-Delhi remained the most popular flight route in April, with 1656 departures, it was also the most impacted, with daily flights dropping from 77 on the first day of the month to only 34 by the end of the month. Flights from Delhi to Bengaluru, Srinagar, Kolkata, and Patna rounded out the top five routes.
As standards for RT-PCR=negative findings were reinstated across states, leisure routes were the hardest hurt. The destinations with the greatest reduction in leisure tourism were Port Blair, Goa, and Srinagar.
With only 50 flights on April 30, Goa saw a 68 percent decline in traffic. On April 1, there were 156 flights to Goa from all throughout the country. A few sectors vanished entirely from the airmap. Flights to Goa from Hubli, Jaipur, Lucknow, Nagpur, Kannur, Amritsar, Pune, and Ahmedabad were all cancelled, with the most significant impact coming from Delhi, where only seven flights were available instead of the usual 40.
Port Blair, which has long maintained a tight inbound visitor policy, reported a 56 percent drop in traffic. Direct flights from Mumbai and Delhi were cancelled, and the most popular route from Chennai saw over half of its flights cancelled.
May has been much more difficult than April. For the first time since August 2020, passenger traffic fell below 1 lakh passengers per day. The number of flights has also gone below 1,000. This represents less than 30% of departures and fewer than 15% of traffic prior to COVID-19. The government of India opened up air traffic with a capacity ceiling of 33%, and a year later, we are back to where we were a year ago!
“With domestic demand decreased to a fourth of pre-pandemic levels, it is difficult for airlines to locate routes that will allow them to satisfy the variable cost of operations,” says Piyush Bansal, Operations Lead and ISTAT Certified Appraiser at ICF. Long-term survival necessitates continued reductions in fixed and semi-fixed costs, which is difficult but not impossible.
With IndiGo’s board of directors approving QIP fundraising and GoAir filing a DRHP, the two airlines have devised a strategy to raise extra capital. While AirAsia India has reduced its service, Vistara is growing! TATA’s assistance for each of these airlines will be determined over time, but it continues to cast doubt on SpiceJet’s ability to exist and recover from the crisis.