Note ban pulls down air cargo traffic by 12% in November: ICRA

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 % from 22 % in the rest of the year, says a report.

Air passenger traffic stood at 22.6 million, exhibiting a growth of over 19 % in November on a month-on-month basis, cargo traffic witnessed a decline of 12 % in the month, while air traffic as a whole declined 2 %. Even passenger traffic growth on a m-o-m basis tempered to 19 % from over 22 % 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 % in November as against 14 % in October, notes the report.

During the first 8 months of the current financial year, passenger traffic has grown 19 %, aircraft traffic has grown by 15 % and cargo traffic has grown by 9 %, 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 % m-o-m and 19 % 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 % in November as against 12 % 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 % of overall cargo traffic in the country, reported a relatively stable growth of 15 % in the month compared to 16 % 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 % 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 % and 6 %, 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 %), which constitutes over 78 % 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 % fall in November as against 7 % 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 % y-o-y increase, respectively in

November, significantly higher than the 8 and 6 % 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 % and non-metros with a y-o-y growth of 22 %.

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

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