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May 27, 2024

ICRA Comments on Aviation Industry Monthly Domestic Passenger Traffic Data for October 2022 


“The domestic aviation industry continues to witness recovery, with domestic passenger traffic for October 2022 estimated at ~114 lakh, ~10% higher compared to ~103 lakh in September 2022 and ~26% higher in comparison to the domestic passenger traffic in October 2021, although it fell short by ~8%, compared to pre-Covid levels i.e., September 2019. For 7M FY2023 (April-October 2022), domestic passenger traffic is estimated at ~740 lakh, a YoY growth of ~91%, and lower by ~11% compared to April-October 2019 (pre-covid levels).

The airlines’ capacity deployment in October 2022 was ~16% higher than in October 2021. However, it was lower by ~11% than the pre-Covid levels. It is estimated that the domestic aviation industry operated at a passenger load factor (PLF) of ~84% in October 2022, against ~77% in October 2021 and ~84% in October 2019. 

A steady rise in prices of aviation turbine fuel (ATF) and a general inflationary environment continue to dampen the industry earnings, with ATF prices in November 2022 higher by ~47% on a YoY basis. Further, the same increased by 4.2% sequentially. While airlines have been increasing yields, in ICRA`s view, the same has not been adequate to offset the impact of the rising ATF prices.

A quick recovery in domestic passenger traffic is expected in FY2023, aided by normalcy in operations and the waning pandemic. However, the earnings recovery for domestic airlines will be slow-paced due to elevated ATF prices in addition to the rupee depreciation against the US$ amid a heightened competitive environment.”

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