The credit rating agency ICRA projects that Indian air passenger traffic will grow between 8 to 13 percent in FY24, reaching 150-155 million and surpassing pre-Covid levels. The ongoing recovery in domestic and international air passenger traffic, coupled with a relatively stable cost environment, supports this positive outlook.
The agency foresees this growth trend extending into FY2025, with a similar estimated year-on-year growth. Factors contributing to this optimistic forecast include increasing demand for both leisure and business travel and improvements in airport infrastructure.
Notably, international passenger traffic for Indian carriers has exceeded pre-Covid levels in FY2023 and is expected to continue growing by 7 to 12 percent to 27-29 million in FY2025. ICRA highlights the industry’s improved pricing power, reflected in increased yields and a favorable spread between revenue per available seat kilometer and cost per available seat kilometer (RASK-CASK).
The overall net loss for the industry is anticipated to be significantly lower at about Rs 30-40 billion in both FY2024 and FY2025, compared to approximately Rs 170-175 billion in FY2023. Key factors contributing to this include declining aviation turbine fuel (ATF) prices and relatively stable foreign exchange rates, according to The Free Press Journal.
Despite the challenges posed by engine failures and supply chain disruptions, the Indian aviation industry holds a substantial order book of around 1,700 aircraft, more than double the current fleet size.
ICRA acknowledges that ongoing challenges may lead to about 24-26 percent of the industry’s capacity being grounded by March 31, 2024. This could result in increased operating expenses for airlines, offset by healthy yields, high passenger load factors, and compensation from engine original equipment manufacturers (OEMs), providing some relief to the industry’s cost structure.
(Finance World and The Free Press Journal have published the article under a mutual content partnership arrangement.)
