Note ban pulls down air cargo traffic by 12 per cent in November: Icra

MUMBAI: The demonetisation drive has not only badly hit the air cargo market leading to a 12 percentage points slump on a month-on-month basis but has also slowed down the passenger traffic growth in November to 19 per cent from 22 per cent in the rest of the year, says a report.

Air passenger traffic stood at 22.6 million, exhibiting a growth of over 19 per cent in November on a month-on-month basis, cargo traffic witnessed a decline of 12 per cent in the month, while air traffic as a whole declined 2 per cent. Even passenger traffic growth on a m-o-m basis tempered to 19 per cent from over 22 per cent in the previous month, says a report by domestic rating agency Icra.

In contrast to the robust y-o-y growth in passenger and aircraft traffic, the y-o-y growth in air cargo traffic halved to 7 per cent in November as against 14 per cent in October, notes the report.

During the first 8 months of the current financial year, passenger traffic has grown 19 per cent, aircraft traffic has grown by 15 per cent and cargo traffic has grown by 9 per cent, according to the report.

Air traffic growth moderated due to the slowdown in economic activity following the note ban, says Harsh Jagnani,a vice-president at the domestic rating agency Icra.

"November reported slight moderation in total passenger traffic growth on both m-o-m basis and year-on-year basis. But growth remains healthy (3 per cent m-o-m and 19 per cent y-o-y) reflecting the continuing overall positive growth trajectory," says Jagnani.

He added, "The slowdown is primarily on account of decline in domestic cargo traffic, which reported a y-o-y degrowth of 4 per cent in November as against 12 per cent growth in October. The cargo traffic fall can be attributed to the slowdown in economic activities following the note ban.

"However, the international cargo traffic, which constitutes around 63 per cent of overall cargo traffic in the country, reported a relatively stable growth of 15 per cent in the month compared to 16 per cent in October, thereby supporting the overall cargo traffic growth," Jagnani says.

It can be noted that in a surprise move, the government on November 8 had denotified as much as Rs 20.51 trillion worth of Rs 1,000 and 500 banknotes which is 86 per cent of the total money in circulation.

Both domestic and international cargo traffic reported a a decline on m-o-m basis in falling by 20 per cent and 6 per cent, respectively. Moreover, 18 out of the top 20 airports reported m-o-m decline in cargo traffic in the month under review.

Jagnani further says passenger traffic growth in the month has been driven primarily by significant y-o-y increase in domestic passenger traffic (22 per cent), which constitutes over 78 per cent of passenger traffic as of end-November.

Aircraft traffic growth also reported slight moderation on y-o-y basis, however, on m-o-m basis it reported 2 per cent fall in November as against 7 per cent growth in October.

Both domestic passenger and aircraft traffic continue to dominate total traffic with domestic passenger traffic and domestic aircraft traffic reporting a 22 and 16 per cent y-o-y increase, respectively in November, significantly higher than the 8 and 6 per cent growth in international passenger and aircraft traffic, respectively.

The domestic passenger growth has remained broad-based with 19 out of the top 20 airports exhibiting double-digits y-o-y growth rates. Growth remained robust across both the metros with a y-o-y growth of 17 per cent and non-metros with a y-o-y growth of 22 per cent.

Further, air cargo traffic reported m-o-m decline of 12 per cent in November as against a 9 per cent m-o-m growth in October.