In February, air travel reaches new heights.
Air travel in India has surged to a new post-covid record in February, with an unexpectedly robust showing in what is typically one of the slowest periods for airlines, driven by a rebound in corporate travel and demand from events such as the recent G20 meetings and Aero India.
India’s average daily domestic air passenger numbers in February increased to around 420,000 from 410,000 in December. The average daily passengers in January and February have also been higher than the figures recorded in the festival months of October and November, which saw 370,000 and 390,000 respectively.
In fact, domestic air passenger traffic has surpassed the post-covid record achieved in December, reaching new highs in February. The numbers peaked at 444,845 passengers on 19 February and 437,800 passengers on 12 February, surpassing the previous high of 435,500 passengers on 24 December.
Travel portals such as Ixigo have seen a 15-20% month-on-month increase in flight searches and bookings to popular business centres like Delhi, Bangalore and Mumbai. The ongoing wedding season has added to the rise, bringing in leisure travellers.
“India is still seeing a huge pent-up demand for domestic travel. While the last quarter was dominated by festive rush and leisure holidays, this year, corporate travel has picked up pace, especially in January and February, which saw maximum conferences and events happening,” said Rajnish Kumar, co-founder and group chief product and technology officer, Ixigo.
There was also a sudden surge in bookings this month for Bengaluru due to high-profile events like India Energy Week, a G20 meeting and the Aero India show.
The fiscal fourth quarter has traditionally been weak as corporates cut down on travel and negligible leisure travel due to school examinations during the end of the year.
That seems to have changed: “As we stand right now, domestic air traffic in Q4FY23 is trending above the Q4FY20 (pre-covid) level, fuelled by the travel demand of the leisure segment. The current trends indicate that the Indian market is maturing toward a higher level of demand. This augurs well for the sector as we head into the peak summer season,” said Saujanya Shrivastava, chief operating officer for flights and Gulf Cooperation Council, MakeMyTrip.
In response to increased demand, airlines are deploying more capacity, and the number of daily flight departures in India has surpassed 3,000 for the first time since the onset of the pandemic. The highest number of post-pandemic flight departures was recorded on 19 February at 3,037.
Despite capacity additions, travel portals and analysts said airfares have stayed firm though it has softened from the peak levels seen in December.
“The demand for air travel continues to soar high, despite an increase in airfares, which clearly reflects the demand. Air travel prices have certainly gone up ever since the pandemic by approximately 30-40%, which is partly due to a rise in input costs. So yes, airfares in the current quarter are higher than they traditionally are in Q4,” Nishant Pitti, CEO and co-founder, EaseMyTrip said.
Financial analysts predict better financials for airlines that have recorded better financials. JM Financial Institutional Securities Ltd expects the sector to fare much better than recent past, given recent gains of the festive season, sharper recent demand comeback, and relatively stable crude and the rupee.
IndiGo, India’s largest domestic carrier, also expects a better March quarter. “These yields have softened compared to the third quarter, largely because of seasonality. But the good thing is that the yields are still holding up much higher than what they used to be at pre-covid level. So, that’s a positive kind of indication,” IndiGo chief financial officer Gaurav Negi said at the company’s post-earnings conference call.
A combination of high fares and low costs could translate into better March quarter numbers for airlines.
“Demand remains strong with improved corporate travel coupled with higher international travel. Lower aviation turbine fuel charges and stable forex coupled with healthy traffic would lead to a better year-on-year performance in Q4FY23,” said Mitul Shah, head of research, Institutional Equity at Reliance Securities.