Indian Economy News

Domestic air passenger traffic grows 5.1 pc to about 138.9 mn in May: ICRA

In May, India's domestic air passenger traffic grew by 5.1% year-on-year to an impressive 138.9 million, which is approximately 14% higher than pre-Covid levels, according to credit ratings agency ICRA. The outlook for the Indian aviation industry is stable, with a robust recovery in both domestic and international air passenger traffic and a favourable cost environment. Capacity deployment by airlines in May increased by 6% year-on-year and was about 2% higher than in April 2024. For FY2024, domestic air passenger traffic reached around 154 million, reflecting a remarkable 13% year-on-year growth and surpassing pre-Covid levels of around 142 million in FY2020. International passenger traffic for Indian carriers stood at around 29.68 million last fiscal, showing a substantial year-on-year growth of around 24%. The industry also enjoyed improved pricing power, indicated by higher yields compared to pre-Covid levels.

India's aviation industry is witnessing a positive trend, with the expectation of continued momentum in air passenger traffic into FY2025. Average ATF prices in FY2024 were Rs 103,499/KL (US$ 1239), 14% lower than FY2023, demonstrating a relatively stable cost environment despite being higher than pre-Covid levels. In Q1 FY2025, average ATF prices were 5.4% higher year-on-year, though they declined by 6.5% in June 2024. Fuel costs, a significant portion of airlines' expenses, are being managed effectively, with a focus on maintaining pricing discipline. Despite high fixed costs and foreign currency debt, the industry is on a path to recovery, with ICRA expecting net losses to decrease significantly to around Rs. 30-40 billion (US$ 359-479 million) in FY2025 from Rs. 170-175 billion (US$ 2.04-2.10 billion)  in FY2023. This positive outlook is supported by healthy passenger traffic growth and strong pricing discipline, indicating a bright future for India's aviation industry.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.