IndiGo may see best quarter in its history, 125 grounded aircraft likely to fly again in Q2: CAPA

However, Jagannarayan Padmanabhan, Senior Director at CRISIL Market Intelligence and Analytics, expects IndiGo yields to moderate going forward. And overall, too, he sees current realisations moderating in and expects supply to ease out soon.

India’s airfares have skyrocketed against the backdrop of Go First’s cancelled flights and nearly 125 grounded aircraft (overall) due to supply chain issues. Kaul said he expects the grounded fleet to be operational in the July to September 2023 quarter.

“As we go down to Q2 and Q3, we are expecting a lot of supply; roughly about 125 aircraft are grounded, so the majority of those aircraft will come back and almost 100 plus additions are likely to come this fiscal,” he told CNBC-TV18.

He explained that a combination of grounded aircraft back in the air, new capacity from the second half of the financial year and estimates of fuel at $80-82 per barrel and a dollar of around Rs 85 are the basis for CAPA’s projections for FY24 done in February-March.

Kaul noted that the demand-supply mismatch was a serious concern and that there has never been this kind of a capacity crisis. “If we compare to pre-COVID-19, we are about 130 aircraft short. We never had such a capacity crisis in the sector that we have been tracking since 2003. So, this is quite serious and the logical outcome of that kind of capacity crisis is that the fares would go up.”

Earlier this month, Kaul said considering the projected demand for the 2024 fiscal year, the shortage could exceed 175 aircraft. Such a significant gap between supply and demand inevitably leads to fare increases, he said.

In the last decade, three airlines including Kingfisher, Jet Airways, and now Go First have been grounded. His remarks come at a time when Go First is under a moratorium and SpiceJet is also facing several headwinds.