Spike in Covid cases pose challenge to aviation sector’s recovery: ICRA

New Delhi: Spike in Covid cases poses a challenge for the aviation sector’s recovery, said ratings agency ICRA.

According to the agency, domestic passenger traffic in March 2021 has been estimated at 77-78 lakh, implying a flat growth on a YoY basis on a low base of March 2020 as travel was affected with effect from March 25, 2020.

“Passenger traffic in March 2021 witnessed a marginal sequential decline of 1 per cent over 78.3 lakh domestic passenger traffic in February 2021,” it said in a report.

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“The airlines’ capacity for March 2021 was around 2 per cent higher than their March 2020 capacity. On a sequential basis, the number of departures in March 2021 were higher by 11 per cent.”

Scheduled international operations are yet to start

Besides, the agency said while the scheduled international operations are yet to start, the Civil Aviation Ministry has permitted international operations under the ‘Vande Bharat Mission’ (VBM) and ‘Air Transport Bubbles’ (ATB).

“Under the VBM for evacuation of Indian citizens from foreign countries, which started from May 7, 2020, the international passenger traffic for Indian carriers has been 30 lakh for the period May 7, 2020 to March 31, 2021. For March 2021, international passenger traffic for Indian carriers under VBM was recorded at 4.5 lakh, a sequential increase of 12 per cent.”

On the aviation turbine fuel (ATF) cost, ICRA cited that following the pandemic, crude oil prices declined materially – reaching a low of $19 per barrel in April 2020, thus leading to a decline in ATF prices.

However, the crude oil prices have increased gradually since then, and currently ranges at around $65 per barrel.

“It declined sequentially by 1.8 per cent in April 2021. While until February 2021, the ATF prices were still lower on a YoY basis, the March 2021 prices were higher by 3 per cent on a YoY basis, and April 2021 prices have been higher still by a whopping 59.8 per cent on a YoY basis, attributed to the low base of April 2020, when the prices declined sequentially by 36.7 per cent due to the impact of the pandemic.”

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