Domestic air traffic up 8% in December 2023, outlook remains stable: ICRA
ICRA expects the momentum in air passenger traffic to continue in FY25, as it is anticipated that there could be further expansion in yields from the current levels may be limited.
Domestic air passenger traffic rose by 8% year-on-year in December to 1.36 crore, as per ratings agency ICRA. In comparison to pre-COVID levels, the air traffic jumped 6% YoY. The capacity deployment in December 2023 by Indian airlines was higher by 3% YoY, but lower by 4% in comparison to pre-Covid levels. Meanwhile, between April-November 2023, the international air traffic for Indian airlines grew by 28% YoY at 1.89 crore.
ICRA in the note said, "Outlook on the Indian aviation industry is stable on the back of the fast-paced recovery in domestic passenger traffic in FY2023 and 9M FY2024, and expectations of the trend continuing for the rest of FY2024.Moreover, the industry witnessed improved pricing power, reflected in the higher yields (over pre-Covid levels) and, thus, the revenue per available seat kilometre – cost per available seat kilometre (RASK-CASK) spread of the airlines.”
It further expects the momentum in air passenger traffic to continue in FY25, as it is anticipated that there could be further expansion in yields from the current levels may be limited.
The ratings agency also pointed out that while ATF prices have decreased sequentially, they’re still elevated over pre-covid levels.
ICRA said, "ATF prices were sequentially lower since April 2023, however trajectory reversed from July 2023 and increased by 1.3% on a YoY basis in October 2023. However, from November 2023 onwards, the ATF prices have again declined sequentially. In January 2024, the ATF prices, at 103,593/KL, were lower by 3.6% sequentially and 6.4% on a YoY basis."
ICRA also pointed out that Indian aviation industry’s net loss is expected to reduce significantly to ₹30-50 billion in FY2024 and FY2025 as airlines continue to witness healthy passenger traffic growth and are maintaining pricing discipline.
"The Indian aviation industry reported a net loss of ₹170-175 billion in FY23 due to elevated ATF prices and also due to depreciation of the Rupee against the US dollar," the agency said, "However the losses are much lower than net loss of Rs 217 billion in FY2022, driven by the airlines’ improved ability to shore up their yields without impacting the demand."
First Published: Jan 10, 2024 4:05 PM IST
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