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Capacity restrictions on airlines operating within the country will be lifted from today. The announcement comes amid a rebound in air travel following the devastating second wave of covid-19 infections. Mint explains the implications.

Why were capacity restrictions imposed?

Airlines resumed domestic operations on 25 May 2020 after being grounded for two months during the nationwide lockdown. As covid infections were still high, airlines were allowed to fly only a third of their pre-covid flights. This cap was gradually raised over the following months, first to 45%, next to 60%, and finally increased to 80% by December. However, the cap was readjusted again in May 2021 amid the second wave of infections to 50% of their pre-covid capacity. A fall in covid infections has led to the current announcement, which appears to be a relief for the industry because of a surge in demand.

Has  domestic air traffic demand recovered?

Domestic air traffic has been increasing every month since May-end/early June this year or ever since the second wave of the pandemic ebbed. Around 6.7 million passengers took to the skies in August, compared to 5.01 million in July, according to the latest data from the Directorate General of Civil Aviation. According to rating agency Icra Ltd, domestic air passenger traffic rose 74% annually and 3% sequentially to 6.9 million in September. Most airlines are now optimistic. They expect domestic traffic to rebound to pre-covid levels by the end of the current fiscal year or earlier.

Rising demand
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Rising demand

How is air traffic expected to fare in 2021?

Domestic air passenger traffic is expected to surge 52% this fiscal year, while international passenger traffic is expected to rise 60%, according to data from aviation consultancy Capa India. However, air passenger traffic is expected to remain well below the figures recorded in 2019-20, prior to the covid-19 outbreak, the report added.

What do the October numbers say?

Average number of daily fliers stood at 262,000 during the week ending 9 October, against 240,000 the previous week, ICICI Securities said. The number of daily flyers touched 30,000 on 9 October, about 75% of pre-covid levels. Departures increased to 2,225 from 2,080 the previous week. According to aviation website NetworkThoughts, domestic air traffic has recorded the highest figures in a 15-day period since the resumption of air travel last year, at just over 4 million fliers between 1 and 15 October.

How will the removal of curbs impact ops?

Airlines are expected to increase their capacities during the ongoing festive season through December and ahead, as more Indians are expected to take to the skies. Interestingly, most travel in the domestic segment continues to be VFR travel—Visiting Friends and Relatives. Corporate travel is yet to return to its pre-covid levels. But a cap on fares still continues, though its rollover period has been cut to 15 days from 30 days earlier. The removal of fare caps will lead to a faster revival, as India is a highly price sensitive market.

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