Airlines in India will bounce back to 80% pre-Covid capacity this year, predicts Morgan Stanley

Indian aviation industry will bounce back to 80% of pre-Covid capacity during October-December 2021 period as about 9.2 crore domestic passengers are expected to take to the skies during financial year (FY22) and 14.4 crore during FY23. This was revealed by Morgan Stanley Research in its recent report on the aviation sector. “Overall, we estimate 9.2 crore domestic passengers in India in FY22 against 14.1 crore in FY20,” the report said, assuming that there is no further impact from the pandemic.

Air traffic picked after lockdown was lifted in May 2020 and rose every month till March 2021 before the second wave of Covid-19 hit the country. During May, the government set a cap stating that India will be able to sell seats up to 50% of their total capacity on domestic flights citing high number of Covid-19 infections and as travel demand fell during the second wave of the Covid-19 pandemic. Air passenger traffic in India rose for the sixth straight week during the week ending on July 10 as a fall in Covid-19 cases and easing of curbs by most states led more people to take to the skies.

“As vaccination rollouts continue across the world, key markets are seeing a sharp rebound in domestic air travel,” Morgan Stanley said. “With the second wave appearing to ebb, airline passenger traffic is again seeing a modest recovery.”

Over the past week, daily airline passenger traffic reached an average of about 140,000, implying about 36% of pre-Covid traffic (about 175,000 passengers on July 4, 2021, implying about 44% of pre-Covid levels),” the report said. “We believe that there is a significant pent-up leisure travel demand in the system and swift vaccination drive can aid the return of such demand,” it added.