Air travel made a new record in February

India’s average daily domestic air passengers increased from 410,000 in December to about 420,000 in February. 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 a new high in February. Passenger numbers of 444,845 on 19 February and 437,800 on 12 February surpassed the previous high of 435,500 on 24 December.

Travel portals such as Ixigo have seen a 15-20% month-on-month growth in flight searches and bookings to popular business hubs such as Delhi, Bangalore and Mumbai. The ongoing wedding season has added to the growth, attracting leisure travelers.

“India is still witnessing huge demand for domestic travel. While the previous quarter was dominated by festive rush and holiday breaks, this year, corporate travel has picked up pace, especially in January and February, which saw maximum conferences and events,” said Rajneesh Kumar, Co-Founder and Group Head Product and Technology Officer, ixigo.

There was a sudden spurt in bookings for Bengaluru this month due to high-profile events such as the India Energy Week, G20 meeting and the Aero India Show.

The fiscal fourth quarter has traditionally been weak as corporates cut down on travel and holiday travel was negligible due to year-end school exams.

That seems to have changed: “As we stand now, domestic air traffic in Q4FY23 is operating above Q4FY20 (pre-Covid) levels, driven by travel demand from the leisure segment. Current trends indicate that the Indian market is maturing towards a higher level of demand. This augurs well for the region as we head into the peak summer season,” said Saujanya Srivastava, chief operating officer for flights and Gulf Cooperation Council, MakeMyTrip.

In response to increased demand, airlines are adding more capacity, and the number of daily flight departures in India has crossed 3,000 for the first time since the start of the pandemic. The highest number of flight departures since the pandemic was recorded at 3,037 on 19 February.

Despite the capacity addition, travel portals and analysts said airfares have remained stable, though it has softened from the peak levels seen in December.

“Demand for air travel continues to grow despite the increase in air fares, which clearly shows the demand. Air travel prices have certainly increased by around 30-40% since the pandemic, which is partly due to increase in input costs. So yes, airfares in the current quarter are traditionally higher than Q4,” said Nishant Pitti, CEO & Co-Founder, EaseMyTrip.

Financial analysts have projected a better financial position for airlines that have recorded better financial records. JM Financial Institutional Securities Ltd expects the sector to outperform in the recent past, given recent gains from the festive season, a sharp recovery in recent demand, and a relatively stable crude oil and rupee.

India’s largest domestic airline Indigo is also expected to have a better March quarter. “These yields have softened compared to Q3, mainly due to weather. But the good thing is that yields are still much higher than pre-Covid levels. So, it is a positive kind of sign,” Indigo Gaurav Negi, chief financial officer of the company, said in the company’s post-earnings conference call.

The combination of higher fares and lower costs could translate into better March quarter numbers for the airlines.

“Demand remains strong with improved corporate travel coupled with higher international travel. Stable forex along with lower aviation turbine fuel charges and healthy traffic will lead to better year-on-year performance in Q4FY23,” said Mitul Shah, Head of Research, Institutional Equities at Reliance Securities.