The number of daily air passengers is expected to cross pre-COVID levels in the next two months, Civil Aviation Minister Jyotiraditya Scindia said on Monday and also urged states to reduce tax on jet fuel to boost the country’s aviation sector.
During the pre-COVID times, domestic airlines carried around 4 lakh passengers per day and the number began climbing up after second wave but again declined after the emergence of Omicron infections late last year. Scindia said capacity and fare caps were put in place to make sure that there was a “little bit of an insulated environment in which the industry can function to ensure that all our players survive and all of them get some decent market share and some levels of revenue”.
Airlines were allowed to operate at full capacity from October 18, 2021.
“In November, December, we started hitting numbers of 3.8 to 3.9 lakh passengers per day. We were almost back to pre-COVID levels… with Omicron, number of travellers tanked… we fell to 1.6 lakh per day. So we had a contraction of about 65-70 per cent,” the minister said. Speaking at an event organised by the All India Management Association (AIMA), Scindia said that on Sunday, the traffic was at 3.5 lakh.
“All things remaining equal, in the next 2 months or so, you should see us crossing pre-COVID levels in terms of daily passengers… that will herald new demand, new capacity coming in, both at airports and airlines…,” he said. Last month, domestic airlines carried 64.08 lakh passengers, a decline of 17.14 per cent compared to the year-ago period. In January last year, the traffic stood at 77.34 lakh passengers, according to data from aviation watchdog DGCA.
The country’s civil aviation sector was significantly impacted by the coronavirus pandemic and the sector’s loss was around Rs 19,000 crore in the last fiscal ended March 2021. In the wake of the pandemic, domestic commercial flights were suspended for two months starting from March 25, 2020 while commercial international flights remain suspended since March 23, 2020. Currently, overseas flights are being operated under bilateral air bubble arrangements.
Scindia also urged states to reduce the Value Added Tax (VAT) levied on Air Turbine Fuel (ATF), which accounts for about 40 per cent of an airline’s operational costs. “In the last 5 months, 12 states and Union Territories have reduced VAT from 25-30 per cent down to 1-4 per cent, including Madhya Pradesh, Gujarat, Karnataka…,” he said, adding that now 24 states and Union Territories have cut the VAT on jet fuel.
Regarding drones, Scindia said an investment of around Rs 5,000 crore is being looked at in the manufacturing space while the drone services space is expected to see Rs 30,000 crore revenue in 5 to 6 years. The minister has set up nine advisory groups to discuss ways to bolster various areas of the civil aviation sector, including Maintenance, Repair and Overhaul (MRO). “We are crafting a game plan and strategy for each one of the sector so that it becomes pivotal in pushing the civil aviation industry towards that ecosystem,” he added.
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