AVIATION - NO HIGH SKIES

The first thing many want to do after we can safely say that Covid is under control? Travel, of course! Being cooped up in their small houses and with WFH taking a toll, with no vacation for the past 15 months and to drive away the blues and stress, people are more eager to travel than eat out. Going outdoors, to the mountains or sea or forests – nature is BIG on the travel itinerary.

What we saw after the first wave was that air travel took off. In November 2020, 63.4 lakh passengers traveled through Domestic airlines, which was about 50% of the domestic air-passenger traffic of November 2019. It remained high in Dec, Jan and Feb though we started seeing tapering in March, while April and May were once again bad.

During May 2021, domestic Air passenger traffic fell to 21.15 lakhs v/s 57. 25 lakhs during April 2021. The combined domestic air traffic for the two months of April & May 2021 is only slightly better than the reported numbers for March 2021.

With cases coming down and restrictions slowly being lifted, maybe the domestic air travel will get some leg up. It will not exactly soar through the roof as fears of the third wave remain; till then it will be cautious and a very small portion for pleasure and vacation.

Just as travel by road has been super expensive due to cost of petrol, air travel has also become expensive. In a bid to help the sector, the aviation ministry hiked the lower limit on airfares by 13 to 16%.  The upper limits have remained unchanged. This came into effect from 1st June.

In quantifiable terms, what this means is that the lower limit for flights under 40 minutes of duration will be increased from Rs.2,300 to Rs.2,600 and for those flights with a duration between 40 minutes and 60 minutes, there will be a lower limit of Rs.3,300 instead of the earlier Rs.2,900.

So, the fear of the third wave lurking round-the-corner, the hit on incomes due to the pandemic and the increased air fare – all these point to one truth – air travel is not yet going to take off any time soon. If you are stocking up on aviation stocks – well, it will be a long, long journey to any meaningful gains.