Aviation News

Domestic air traffic expected to improve by 52% in FY22: Capa

Written by B2BChief


Domestic air passenger traffic in India is expected to surge 52% this fiscal while international passenger traffic is expected to rise 60%, rebounding from the turbulence caused by the pandemic, Capa India said on Thursday.

Overall passenger traffic is, however, expected to remain well below the figures recorded in FY2020 prior to the covid-19 outbreak, the aviation consultancy said in its India Aviation Outlook FY2022.

Capa India expects about 80 million passengers to fly within the country and 16 million to travel overseas this fiscal, up from 53 million domestic passengers and 10 million international passengers during FY2021. The figure would widely lag the 138 million passengers who flew on domestic routes and 67 million passengers who took international flights during FY2020.

“In FY2022, the metro-metro network (airline network between two metropolitans) is likely to rebound to 53.7% , (while) metro-non metro to 80% and non-metro to non-metro to 70% of pre-covid levels,” Capa said. “International flights are expected to continue under air bubble agreements in FY2022, with air traffic recovering to 47.8% of pre-covid (levels) by March 2022,” it said.

Indian airlines are likely to incur a consolidated loss of about $4.1 billion this fiscal, swelling combined losses over FY2021 and FY2022 to about $8 billion, as a result of the pandemic, according to Capa estimates. This will leave several airline operators struggling to recover from two consecutive years of massive losses. “The severity and impact of the second wave will virtually close the door for most aviation businesses in terms of access to lenders, in the absence of government intervention, which is unlikely,” it said.

The Indian aviation industry will need to operate with strong balance sheets, improve corporate governance, eliminate leakages, shore up liquidity, reduce costs, and enhance revenue through ancillaries to address this situation, it said.

Capa India also expects the pandemic’s second wave to accelerate consolidation as the market is not seeing recapitalization to the levels required to avoid this.

“We continue to believe that the structure of the industry will change. Supply-side risks have increased sharply as a result of the second wave. Once realized, this will create a strategic dilemma for policy makers and regulators,” it said.

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