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July 19, 2024

ICRA Comments on Aviation Industry Monthly Domestic Passenger Traffic Data, December 2022 

Suprio Banerjee, Vice President & Sector Head – Corporate Ratings, ICRA Limited

The domestic aviation industry continues to witness recovery, with domestic passenger traffic for December 2022 estimated at ~129 lakh, ~10% higher compared to ~117 lakh in November 2022 and ~15% higher in comparison to the domestic passenger traffic in December 2021 and only short by ~1%, compared to pre-Covid levels i.e. December 2019. For 9M FY2023 (April-December 2022), domestic passenger traffic is estimated at ~986 lakh, a YoY growth of ~63%, and lower by ~9% compared to April-December 2019 (pre-Covid levels).

The airlines’ capacity deployment in December 2022 was slightly higher (less than ~1%) than December 2021. However, it was lower by ~7% than the pre-Covid levels. It is estimated that the domestic aviation industry operated at a passenger load factor (PLF) of ~91% in December 2022, against ~80% in December 2021 and ~88% in December 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 January 2023 higher by ~55% on a YoY basis. Although, the prices remained unchanged 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.

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

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