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The new normal in aviation sector in post-Covid era

Gone are the days when passenger traffic grabbed all the airline attention. The cargo divisions are now delivering for the airlines. Covid-19 has perhaps given the airlines a strong lesson. Cargo is an important revenue stream for them.

The new normal in aviation sector in post-Covid era
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The new normal in aviation sector in post-Covid era

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For air cargo, 92 per cent of the business is still there, whereas about 90 per cent of international passenger traffic has disappeared.

Passenger numbers are expected to grow to 2.8 billion in 2021. This would be one billion more travellers than in 2020, but still 1.7 billion travellers short of 2019 performance. Cargo is performing better than the passenger business. It could not, however, make up for the fall in passenger revenue.

But it has become a significantly larger part of airline revenues and cargo revenues are making it possible for airlines to sustain their skeleton international networks.

In 2019 cargo accounted for 12 per cent of revenues and that is expected to grow to 36 per cent in 2020.

Passenger numbers are expected to grow to 2.8 billion in 2021. That would be a billion more travelers than in 2020, but still 1.7 billion travellers short of 2019 performance. Passenger yields are expected to be flat and the load factor is expected to improve to 72.7 per cent (an improvement on the 65.5 per cent expected for 2020, but still well below the 82.5 per cent achieved in 2019).

The cargo side of the business is expected to continue with strong performance. Improved business confidence and the important role that air cargo should play in vaccine distribution is expected to see cargo volumes grow to 61.2 million tonnes (up from 54.2 million tonnes in 2020 and essentially matching the 61.3 million tonnes carried in 2019). A continued capacity crunch due to the slow reintroduction of belly capacity from passenger services combined with a higher proportion of time and temperature sensitive cargo (vaccines) will see a further 5 per cent increase in yields. This will contribute to strong performance in cargo revenues which are expected to grow to an historic high of $139.8 billion.

India really has to wake up and understand the potential of international cargo; it's the hidden jewel of cargo business in terms of profit. However, right now 95 per cent is handled by international carriers.

Passenger traffic amounted to over 341 million at airports across India in the fiscal year 2020. That year, close to 66 million international passengers were handled at the airports. There was a drop registered in both the domestic and international passengers.

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