Barriers in the skies

The pandemic has hit almost every sector of the Indian economy. While some areas recorded recovery till the second wave hit, aviation continued to show considerable stress even when the Covid-19 spread had subsided. The second wave seems to have only worsened the health of the sector.

Flights from India to top foreign destinations grew 60 per cent from July to December 2020, as the world opened up gradually (chart 1).United Arab Emirates, the top destination for Indians, saw a doubling of flights.

In 2021, however, the demand is again dropping. South Asia has been the most affected region in terms of seat capacity in April. It is, in fact, the only region showing a drop in seat capacity compared to March (chart 2). The renewed coronavirus surge in India seems to have done the damage.

According to available data, domestic business had recovered to a limited extent till January 2021. Airlines had scheduled 75 per cent seat-kilometres compared to the prepandemic period. When the economy (gross value added) is slated to grow 2.5 per cent in the January-march quarter, aviation lost 25 per cent of its operational capacity during the same period. Not just that, only two-thirds of the capacity is being used, compared to 90 per cent in the pre-pandemic times (chart 3), partly due to regulatory limits.

International travel is running at one-third of the capacity. This is likely to worsen further as most countries are banning flights from India. However, international business seemed more efficient in terms of seat capacity being used (chart 4). The passenger load factor for international flights was 73 per cent in January, compared to 69 per cent for domestic business.

For cargo transported by air, domestic business is closing in on pre-pandemic levels slowly. Global cargo movement by air is struggling at half of usual levels (chart 5). In that, cargo exports have taken a bigger hit than cargo imports, shows chart 6.