Home >News >India >Spike in cases, ATF prices may derail aviation revival

A fresh spurt in coronavirus infections and travel restrictions by some states is threatening to derail the fragile recovery of the domestic civil aviation sector—one of the worst hit by the pandemic.

Adding to the woes of airlines is the rising prices of jet fuel, which makes up the bulk of the cost of running an airline in India.

Several states have made a negative covid test report mandatory for those flying from regions facing a recurrence of coronavirus. For instance, air travellers from Maharashtra, Kerala, Chhattisgarh, Madhya Pradesh and Punjab have to submit negative RT-PCR test reports before entering Delhi. Karnataka, Uttarakhand, West Bengal have taken almost similar steps.

The latest curbs have hit air travel demand. A total of 285,000 people chose to fly each day in the week ended 27 February, falling from 300,000 per day in the week ended 20 February, ICICI Securities said in a report on the civil aviation sector on Monday. “With rising covid cases in the last few weeks, the possibility of another lockdown has increased, which is a threat to air traffic," the report said.

Meanwhile, oil marketing companies (OMCs) on Monday hiked jet fuel prices by about 10% over last month amid a firming up of global crude oil prices. Jet fuel accounts for about a fourth of expenses for major domestic airlines. ATF prices stood at 59,400.91 per kilolitre (kl) in New Delhi on Monday, according to Indian Oil Corp. Ltd.

Industry analysts said covid tests mandated by some states seemed to have had a negative impact on air ticket bookings.

“There has been about a 15% drop in bookings (during the second half of February) as compared to the first fortnight of the month. However, if the recent spike in the number of cases is arrested quickly, then the travel sentiment may improve, and recovery may come back on track," said an airline official on condition of anonymity.

Air traffic began to improve from May 2020 following the easing of rules on the resumption of domestic flights after two months of grounding due to the pandemic. However, on an annual basis, the tally of domestic air travellers has yet to reach February 2020-levels, just before the pandemic struck.

Spokespeople for IndiGo, SpiceJet, Vistara and Air India declined to comment.

“Barring (a) few sectors, the customer confidence is intact and the aviation sector is poised to attain pre-covid levels," said a GoAir spokesperson.

Indian airlines recorded a 5.6% sequential growth in domestic air passenger traffic in January at 7.73 million passengers, as per data from the Directorate General of Civil Aviation (DGCA). The figure is, however, 39.5% less than that of January last year.

“January-March period is typically a weak quarter for airlines, as compared to the October-December quarter. Airlines could be looking at bigger losses during the March quarter (as compared to the December quarter) if a second wave of the covid-19 pandemic hits several states in the country, which could result in an erosion of travel appetite," said an airline official, who spoke on the condition of anonymity.

“As things stand, leisure travel could take a few more months to recover," the official added.

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