Latest News | Domestic Air Passenger Traffic Rises About 23 Pc to 1.24 Crore in August: Icra

Mumbai, Sep 12 (PTI) India's domestic air passenger traffic rose about 23 per cent year-on-year to 1.24 crore in August and was 6 per cent higher than the pre-Covid level (August 2019) of around 1.18 crore, credit rating agency Icra said on Thursday.

On a sequential basis, the growth in traffic during the previous month was around 3.2 per cent, with 1.21 crore passengers flying on domestic routes in July, it added.

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Also, the capacity deployment in the reporting month grew 10 per cent against August 2022 and lower by 1 per cent in comparison to the pre-COVID levels (August 2019), Icra said.

The ratings agency said the outlook on the domestic aviation industry is 'stable' on the back of the fast-paced recovery in domestic passenger traffic in the previous fiscal and expectations of the trend continuing in this fiscal as well.

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Moreover, the industry witnessed improved pricing power, reflected in the better yields and thus the revenue per available seat kilometre – cost per available seat kilometre (RASK-CASK) spread of the airlines, it noted.

The same is expected to continue with a year-on-year decline in aviation turbine fuel (ATF) prices since April this year and relatively stable foreign exchange rates, Icra said.

It noted that sequential increases in jet fuel prices remain at elevated levels vis-a-vis pre-Covid levels, and despite a healthy recovery in air passenger traffic, the domestic aviation industry continues to face challenges on account of elevated ATF prices and depreciation of the rupee against the US Dollar, when compared to the pre-Covid levels -- both have a major bearing on the airlines' cost structure.

It also said the pace of recovery in industry earnings is likely to be gradual, owing to the high fixed-cost nature of the business.

The industry is estimated to have reported a net loss of around Rs 17,000-17,500 crore in FY23 due to elevated ATF prices twined with the depreciation of the US dollar, according to Icra.

However, it is much lower than the net loss of around Rs 21,700 crore in FY2022, primarily driven by the airlines' improved ability to shore up their yields without impacting the demand, it said.

The net loss is further expected to reduce significantly to Rs 3,000-5,000 crore in FY24 as airlines continue to witness healthy passenger traffic growth and maintain pricing discipline, post the ongoing consolidation in the industry, the rating agency said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)