Indian Aviation Heading for Two Bad Years in a Row

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Indian aviation, specifically the domestic market, which accounts for 2.1% of the world’s passenger traffic, is heading for a second straight bad year. During 2020, fifty-six percent (56%) fewer passengers took to the country’s skies compared to 2019. The outlook for the current year 2021 seems no better.

The domestic passenger traffic for the past years is shown in the figure below. The year 2019 saw 144 million passengers flying with a marginal 4% growth over the previous year. By March 2020, the effect of the first wave of the pandemic resulted in a rapid decrease in traffic; and by April 2020, there was a complete shutdown of services. As the world airlines regained their footholds, the Indian domestic passenger traffic was slow to recover. Again, the deadlier second wave struck the country in May 2021, resulting in another setback. The month of July 2021 saw the passenger traffic crossing the 5 million mark after three months.

If we further analyze the YTD July traffic data for the past year with the current year, we normally can account for 55-59% of the annual traffic by July. The YTD July traffic for years 2020 and 2021 are 37.29 and 39.24 million, respectively. This data indicates that year 2021 will also have annual passenger traffic of around 70 million. Fifty percent (50%) fewer passengers will fly this year compared to the pre-pandemic year of 2019.

It is not surprising that all domestic airlines are piling up their losses after two bad years in a row. SpiceJet has been under severe financial stress of late, where the leading promoter Ajay Singh has declined to infuse fresh funds into the airline.

A quick look at data from IATA regarding the Route-Passenger-Kilometers (RPK) for selected domestic markets shows how Indian aviation fares globally. China domestic has a 19.9% share in the global traffic; the US comes in second with a 16.6% share.

The US is the only country that kept domestic air traffic going after the first wave of the pandemic. China suffered a decrease due to the second wave and also seen a dip last month. Both countries are now operating close to 100% of their capacities.

The Indian policymakers have to take note of this and redefine their policies to open up the skies. Regulations don’t seem to help the passengers, and neither the government.