Economic Survey: Pre-COVID-19 Travel, Aircraft Movement Soon

Economic - aviatorsbuzz
Source: AAI

The Economic Survey 2020-21, which was tabled in Parliament on Friday, said that air passenger travel and aircraft movements are predicted to reach pre-COVID-19 levels in early 2021 as a result of swift and decisive interventions and effective measures put in place by the government.

  • The Economic Survey 2020-21 also predicted ‘V-shaped’ economic recovery for the nation, spurred by COVID-19 vaccination programme
  • The survey also cautioned that it would take at least two years to revert to pre-pandemic gross domestic levels

Domestic passenger flights remained suspended between March 25 and May 24 last year due to the pandemic. When domestic flying started on May 25, airlines were allowed to operate only 33 per cent of their pre-COVID flights. Currently, domestic airlines are allowed to operate up to 80 per cent of their pre-COVID flights.

Economic Survey: Turnaround Underway

According to the Economic Survey, the turnaround can be attributed to a number of steps put in place including ensuring 24×7 operations of cargo terminal facilities, with suitable health safety measures, incentivising early clearage of air cargo warehouses at airports to leave clear passage for essential shipments and international medical and personal protection equipment essentials being were made available.

Economic pandemic CAPA ICRA - aircraft - aviatorsbuzz
A representational picture of aircraft at Bengaluru airport. Source: teamvtaviation/Instagram

The Survey adds that despite the severe challenges posed by COVID-19, the aviation industry persevered through the crisis and demonstrated long-term resilience.

The Mint in a report quoted the survey also also stating that the total aircraft fleet strength of Indian airlines is set to increase to 713 by the end of the current fiscal, up from 669 at the end of fiscal year 2020, despite a steep demand in passenger traffic.

All major airlines continue to take delivery of aircraft due to the long term potential of the sector.

During April-December 2020, Indian airports saw 64.83 million passengers, down 75% from the year-ago period, due to the ongoing covid-19 pandemic, according to data from Airports authority of India. During this period, domestic air traffic dropped 61.4% while international air traffic fell 73.8%.

“Aviation and tourism declined sharply in 2020. Only 2.46 million foreign tourists arrived in India during January-June 2020 as compared to 5.29 million during January-June last year,” the Economic Survey said.

It added that consequently, foreign exchange earnings from tourism declined to US$ 6.16 billion during the first six months of 2020 as compared to US$ 14.19 billion during the corresponding period last year.

However, despite the severe challenges posed by COVID-19, the Indian aviation industry has persevered through the crisis and demonstrated long-term resilience and full commitment to serve, the survey said adding that India is expected to become the third largest overall aviation market by the fiscal year 2025.

However, scheduled commercial international flights — barring cargo flights and those specifically allowed by the civil aviation regulator such as flights under the bilateral air bubble pacts with select countries — remain suspended at least till February 28.

Arvind Sharma, Partner, Shardul Amarchand Mangaldas patterning to the Aviation Sector commenting on the release of Economic Survey said: “Aviation sector is one of the worst affected sectors with zero passenger movement during the lockdown, and now the sector is slowly crawling back to normalcy.”

 

Mr. Sharma added that while the aviation sector would reach pre-COVID level over the next couple of years, in order to improve its financial health, taxes on ATF should be lowered and other sops such as reduction in airport charges, parking fees and navigation charges are expected. “Key measures relating to improving regional connectivity through Regional Connectivity Scheme or UDAN scheme are also expected,” he said.

The real gross domestic product (GDP) is expected to grow by 11% in 2021-22 on the back of nationwide vaccine drive to prevent the coronavirus outbreak, the Economic Survey 2020-21 predicted.

For 2020-21, the economy is expected to contract by 7.7%, the survey said. This is in line with the forecasts by the central bank, most international agencies and private experts. The Reserve Bank of India (RBI) had in December said it expected the country’s GDP to contract 7.5% in the year ending 31 March, 2021.

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