Domestic air traffic to rise 7-10% to 164-170 million in FY25: ICRA (Investment Information and Credit Rating Agency of India)
- IBEF
- December 4, 2024
Domestic air traffic in India is expected to rise by 7-10% to 164-170 million in FY25, according to ICRA (Investment Information and Credit Rating Agency of India). In H1 FY25, domestic passenger traffic reached 79.3 million, reflecting a 5.3% YoY growth, although the figure was partly affected by severe weather disruptions. Meanwhile, international traffic for Indian carriers increased by 16.2% during the same period. Despite the growth in passenger traffic, ICRA projected a net loss for the aviation industry of US$ 236.4-354.5 million (Rs. 2,000-3,000 crore) in FY25, a significant reduction from previous years, owing to the improved pricing power of airlines.
ICRA maintains a stable outlook for the sector, with the industry expected to report a loss of US$ 236.4-354.5 million (Rs. 2,000-3,000 crore) in FY25 and FY26. This is attributed to rising fuel prices and increased operating costs, including aircraft groundings. However, the outlook for H2 FY25 remains positive, with anticipated yield recovery and continued healthy passenger traffic. Aviation Turbine Fuel (ATF) prices and the INR-USD exchange rate heavily influence airlines' costs. ICRA noted that average ATF prices eased by 6.8% to US$ 1,136.26 (Rs. 96,192) per KL in the first eight months of FY25, though they remain higher than pre-Covid levels. Fuel costs account for 30-40% of an airline's expenses, with a massive portion of operating costs denominated in US dollars.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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