India’s airline industry, one of the sectors hardest hit by the Covid-19 pandemic, is showing signs of recovery as passenger traffic steadily climbs and carriers prepare to restore more capacity. After months of grounding and financial strain, airlines are now scaling up operations, resuming hiring, and planning to lease aircraft again in anticipation of stronger demand.
From Near Shutdown to Gradual Revival
Air passenger services had been suspended nationwide between March 25 and May 25 due to the nationwide lockdown. When domestic flights resumed in late May, only 30,000 people flew on the first day. Six months later, on November 30, traffic surged to nearly 2.52 lakh passengers in a single day, according to government data.
The Centre has since permitted airlines to operate up to 80% of pre-Covid capacity, a significant leap from the early restart phase. This expansion has also buoyed the stock prices of listed carriers, signaling renewed investor confidence.
Airlines Scaling Up
IndiGo, the country’s largest airline, has resumed over 1,000 daily flights, connecting 59 domestic and six international destinations, including air bubble services. “We are preparing to deploy 80% of our previous capacity in the domestic market and expect to return to 100% by early 2021,” said Willy Boulter, the airline’s Chief Commercial Officer.
Vistara is operating at about 70% capacity and working toward the 80% threshold, subject to airport slot approvals. In October, major carriers reported higher passenger load factors (PLF), with SpiceJet at 74% and IndiGo at 68%.
Hiring and Fleet Plans
Industry watchers say airlines will soon require additional pilots and crew as demand rises. Many employees who were placed on unpaid leave could also be recalled quickly. Carriers that had surrendered leased planes during the downturn may need to re-lease aircraft to meet higher capacity needs. Analysts also note that the recent clearance of Boeing’s 737 Max by US regulators could benefit SpiceJet, which has several grounded jets of that type.
Challenges and Outlook
Despite the revival, full-year domestic passenger traffic for FY21 is still expected to contract by around 62–64%, steeper than earlier projections. This means volumes could drop to levels last seen a decade ago.
Still, research firms see capacity expansion as a “credit positive” move that will ease cash flow stress and improve financial stability. Analysts also point out that with fears of a total travel ban receding, the sector is likely to witness gradual and sustained recovery in FY22 as business travel, leisure tourism, and regional connectivity gather pace.
However, some challenges remain. State-level restrictions, such as mandatory RT-PCR tests on arrival in certain destinations, continue to suppress demand on specific routes. Overcrowding at airports during peak times is another concern.
Yet the industry mood remains optimistic. “Most airlines expect approval for full capacity operations within the next 2–3 months and are already preparing for the ramp-up,” said Suman Chowdhury, Chief Analytical Officer at Acuite Ratings. “The bigger growth trigger will be the gradual reopening of international routes, which will further strengthen the industry’s rebound.”
