How first-time flyers give wing to Indian aviation

“Some of the first-time fliers were not comfortable with them and, hence, the toilets needed more cleaning than usual,” said an airport official, who did not want to be identified.

But just how many first-time fliers are there each day? With the notable exception of Delhi Airport, which sometimes gathers such data through surveys — this information is not collated by any organization. People are never asked if they’re flying for the first time when they purchase a ticket. In the absence of solid data, executives in the travel and airline industry have to feel their way through with anecdotal evidence — washroom sanitization is just a tiny part of that evidence.

To be sure, nobody is claiming this is solid data; it is just a gauge, like the Hemline Index theory, which posits that skirts become shorter during an economic boom and longer during a recession. That theory has been derided as being too simplistic, but history has the odd example or two that supports it.

“Another notable shift was from passengers representing small and medium enterprises (SME) — most of them have stayed and continue to fly,” said one airline executive, explaining why India’s air passenger numbers have surged after the pandemic abated and lockdowns were relaxed or lifted.

In 2019, India’s domestic passenger numbers had hit a high of 420,000 a day in December — that record has been broken several times since flights resumed. Notably, the highest number of domestic passengers per day was 456,000, achieved in April, which is a non-peak month for air passengers.

While SME executives and leisure traffic have definitely played a role, the general consensus is that first-time fliers are a huge factor behind the spike in passengers.

Who they are

In June 2020, the central government had just started to lift the national lockdown announced three months earlier to contain covid-19. With the resumption of economic activity, companies across India needed blue-collar workers to return to their places of work, many of them from states in the North and East. These workers, however, were not willing to return since they feared another lockdown and wanted to be with their families during those difficult times.

Some companies, like those from the real estate sector, lured them back using flight tickets as an incentive, from cities such as Gorakhpur, Darbhanga and Bhubaneswar to Bengaluru, Hyderabad and Mumbai. This marked the beginning of a new category of passengers entering the aviation ecosystem.

“A lot of companies in key cities, which had hired blue-collar workers from smaller cities, needed these workers to come back and provided them with flight tickets. Now, many of these workers are saving up from their incomes and continuing to take flights,” said a senior executive, who has led the commercial department at domestic airlines and heads a travel service provider. He didn’t want to be identified.

While the above category of fliers has added to the revenue of aviation companies (they are price sensitive and book in advance), leisure travellers, and those running or working for small businesses, who did not return to trains and other modes of travel despite covid-19 waning, have added to the profitability of airlines (they bring in last minute sales; pricey tickets imply better margins).

“The increasing desire of the Indian middle class to spend a significant portion of their disposable income on experience is driving the growth of leisure travel… It is also interesting to note that the domestic flight booking share for last-minute purchases (within zero-six days), where customers would probably end up paying a higher price, increased by 12% in May 2023 compared to February 2020,” Rajesh Magow, co-founder and group chief executive officer (CEO), MakeMyTrip, said in an email response. “Overall, leisure sectors have seen double-digit growth over the pre-pandemic period, clearly indicating India’s new travel outlook — taking breaks as often as possible, seeking new experiences and discovery moments.”

Industry watchers, however, say that business travel from the usual corporate clients continues to remain subdued. “Business travel sectors have just about reached their pre-pandemic level,” said Magow.

Delhi Airport, which is the largest airport in the country, says there has been an increase in the number of passengers taking flights. “We have observed a significant increase in the percentage of frequent flyers (who take multiple flights a year) compared to pre-covid times,” the airport shared in an email response.

“(Our) largest customer cohort is in the age group of 24-45 years, constituting more than 60% of the total passenger profile. This segment of users is well travelled, read and are looking for new experiences,” the Adani Group, which manages the Mumbai airport and six other airports across the country, said in an email response.

While industry analysts say there is no way of getting data on first-time fliers, Delhi Airport, which has been trying to track it through surveys, noted that the number of first-time fliers averaged around 17% pre-pandemic and has now reduced to 13%, but on a higher base.

“The percentage of first-time flyers averaged about 17% in the pre-covid period (April 2019 to March 2020) and reached 20% during the first quarter of the 2021 calendar year, which has declined to 13% during the same period of the 2023 calendar year,” Delhi Airport told Mint in an email response.

To add context, domestic passenger numbers during the first quarter of 2023 surpassed the earlier (December 2019) record of 420,000 several times. The record for the highest total number of passengers in a day till date is 456,082, on the last day of April.

Travel watchers say that airports under the government’s flagship regional connectivity scheme, Ude Desh ke Aam Nagrik (UDAN), also continue to add first-time flyers in the domestic aviation ecosystem.

UDAN boost

On the eighth day of November 2020, a new airport in Darbhanga, Bihar, came to life, with SpiceJet flights connecting the city to Delhi, Mumbai and Bengaluru, and by extension, the rest of the country, under the government’s flagship UDAN scheme.

Within two years, the Darbhanga airport became the most successful one under the UDAN scheme. According to the latest data, updated as of 15 April, the airport has handled 1,413,510 passengers and 9,610 flights since its launch. The number of passengers rose from 153,232 in financial year 2020-21 to 619,586 in 2021-22 and has stabilized at 616,058 in 2022-23.

Darbhanga and Jharsuguda in Odisha are the two most successful airports to have started operations under the government’s flagship aviation scheme, which was announced in October 2016. The first UDAN flight was flagged off in April 2017. The UDAN scheme has connected a total of 74 operational airports, including nine heliports and two water aerodromes.

The scheme aims at providing connectivity to under-served and unserved airports through subsidized flights, where fares for a certain percentage of seats per flight are capped at ₹2,500 per hour of flight.

In return for the seats offered at cheaper rates, the government provides a subsidy or viability gap funding (VGF) to airlines and helicopter operators. The VGF is provided through a per-flight charge on airlines operating on key metro routes.

Government data show that a total of 475 routes had commenced operations under various phases of this scheme — Phase 1.0 to Phase 4.3 — until May this year. The data also show that the government has awarded 1,154 routes under the UDAN scheme. However, airlines have been able to commence flights only on 475 routes till date.

This scheme may not have been able to add substantially to passenger demand, but it has provided a much-needed push to India’s aviation sector, bringing new flyers into the fold. The scheme is now in its fifth round and the government plans to use it to enhance connectivity to remote regions and achieve last-mile connectivity through helicopters.

“The latest round of the UDAN scheme is testament to two emerging phenomena in Indian civil aviation — one, a deeper democratization of air travel, with a focus on last-mile connectivity. Second, a growing appetite for helicopters in aiding tourism. Greater helicopter penetration through such efforts will help boost tourism, hospitality, and thus, our local economies,” Jyotiraditya Scindia, Union minister of civil aviation, said at the launch of the scheme. “UDAN 5.1 heralds a new dawn not just for civil aviation, but also for India’s remote and unserved regions.”

Will the demand last?

India’s surging passenger demand post the pandemic and record-breaking aircraft orders by IndiGo and Air India have been topics of discussion at various global events, including at the recently concluded Paris Air Show, a trade fair. IndiGo announced its 500-aircraft order at the air show in June.

While record aircraft orders—the planes will be inducted by the airlines over a 15-year period—presumes that India’s passenger growth in both the domestic and international sectors will continue over the long term, demand started to slow in July, which is traditionally a weak month for airlines.

Travel industry insiders, however, feel that while growth may have slowed in the current period, it is still holding strong despite the fact that Go First suspended operations, putting pressure on fares.

“Despite growth slowing, daily passenger numbers are holding in the range of about 400,000 per day and that is a big number considering Go First has stopped operations, leading to a spike in fares,” said the senior executive cited earlier.

Government data show that airlines carried 376,000 domestic passengers last Wednesday (19 July), which is about 25% higher than the 300,000 passengers or so carried during the same month last year.

This growth is despite fares going up by about 40% post the suspension of Go First, which accounted for about 7% of the total domestic passenger market, and some airlines registering a decline in demand.

“The higher airfares are affecting air travel plans and dampening demand. Domestic flights and hotel bookings are faring well with an uptick of 20-25% compared to pre-covid levels. However, airfares have increased by 30-40% across all domestic sectors due to rising fuel costs,” said Sabina Chopra, chief operating officer, corporate travel, and head of industry relations, Yatra Online.

“For example, a Delhi-Goa flight, which used to cost ₹8,000, costs ₹12,000 one way (in peak season).”

However, industry watchers feel that the passenger growth in India is playing out the same way as it has in other countries, and that there is no chance of this slowing in the near or long-term.

“It (the growth in passenger numbers in India) is a trend that we have seen in other countries as their middle classes have grown, and it is a trend that we fully expect India will reflect as well in the long term,” said Boeing India president Salil Gupte. “Basically, air travel grows relatively in line with GDP growth. In India’s case, it is growing a little faster than GDP but India’s GDP growth is already the fastest in the world,” he added. “So, that means you’re seeing a significant amount of air-traffic growth for the foreseeable future, and that is really driving the high number of airplane orders, as airlines in India prepare to service that demand.”

Updated: 26 Jul 2023, 11:08 PM IST