Air travel to continue to be impacted in 2021, predicts CAPA

Aviation consultant Centre for Asia Pacific Aviation (CAPA) has predicted that demand recovery will remain uncertain even in 2021, especially for international traffic. According to CAPA, international traffic is only expected to recover 35-40% of financial year 2020 levels, while domestic traffic in financial year 2021-22 is expected to reach 70-80% of financial year 2020 levels.

It stated that discretionary domestic travel segments (business, institutional, MICE, leisure and foreigners travelling on the domestic network), that accounted for an estimated 55% of the market before the Covid-19 outbreak, is unlikely to return until the pandemic is under greater control or deployment of a vaccine is widespread.

CAPA also said that even outbound travel will continue to be impacted by border restrictions and poor consumer confidence until there is effective roll-out of a vaccine.

According to CAPA, there has been very limited discretionary travel demand that could be stimulated through lower fares. Though some carriers opposed pricing restrictions, CAPA expects no major push to change the regulations.

CAPA also said that aviation regulator Directorate General of Civil Aviation (DGCA) and Bureau of Civil Aviation Security will need to be reinvented as professional, independent institutions, to be able to serve the aviation industry of today,which includes generating funding directly from industry operators and consumers.

“The need to modernise these agencies can no longer be ignored as the entire industry will soon be market-driven. Hiving off and corporatising the air navigation services division of the Airports Authority of India (AAI), in line with global best practice, is another overdue reform that should now be pursued. The AAI requires a new long-term business model given that the largest airports will have been privatised,” CAPA said in a report issued on Monday.

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