The Indian government on Thursday announced that domestic airline companies can now start operating at 80% of their pre-Covid capacities with immediate effect. Up until now, the capacity levels were capped at 70%.
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“Domestic operations recommenced with 30,000 passengers on 25 May and have now touched a high of 2.52 lakhs on 30 Nov 2020,” said the Aviation minister.
In addition, the first day of December saw a record of 2,52,374 daily domestic flight passengers since operations had resumed on May 25, 2020. Indian airlines had been asked to stall all operations for about two months owing to the pandemic, but passenger traffic is seen to be gradually increasing over the past 6 months.
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Civil aviation minister Hardeep Singh Puri tweeted about the change on Thursday, offering some relief to airlines looking to fly more passengers during the Christmas-New Year period. “Domestic operations recommenced with 30K (30,000) passengers on 25 May & have now touched a high of 2.52 lakhs on 30 Nov 2020,” Puri said in a social media post.
The Directorate General of Civil Aviation (DGCA) had on Thursday evening issued a circular to increase the cap on domestic flight capacity from 70% to 80% of pre-covid levels. A copy of the DGCA circular has been reviewed by Mint.
Meanwhile, credit rating agency Icra Ltd said in a report on Thursday that Indian airlines will post net losses of about ₹21,000 crore in FY21 following a raft of travel restrictions and amid diminishing travel appetite due to rising covid cases. The airlines will require additional funding of ₹37,000 crore over FY21 to FY23 to recover from losses and debt, it said, adding that it maintains a negative credit outlook on the airline industry.
The profitability of Indian airlines has been adversely impacted in FY21 due to lower revenues and high fixed costs, while passenger traffic continues to improve sequentially. Domestic airlines, which are mostly loss-making, reported net losses of ₹12,700 crore in FY20.
The airline industry’s debt is expected to rise to about ₹50,000 crore, excluding lease liabilities, by FY22, Icra said in the report.
“The two listed airlines (IndiGo and SpiceJet) have together lost about ₹31 crore per day during H1 FY21 (April-September),” said Kinjal Shah, vice president, Icra.
Shah added that daily cash burn for airlines reduced to ₹26 crore during the September quarter due to improvement in domestic passenger traffic, and cost rationalization initiatives by the domestic airlines.
Airlines resumed domestic operations on 25 May, after being grounded for two months due to the lockdown.
