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December 10, 2023

ICRA Comments on Aviation Industry Monthly Domestic Passenger Traffic Data for April 2023

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

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

“The domestic passenger traffic for April 2023 is estimated at ~129 lakh, similar to ~128.9 Lakh in March 2023, though 22% higher in comparison to ~105 lakh in April 2022 and 17% higher than pre-Covid levels of ~110 lakh in April 2019.

The airlines’ capacity deployment in April 2023 was higher by ~8% than in April 2022 and ~9% higher than pre-Covid levels of April 2019. It is estimated that the domestic aviation industry operated at a passenger load factor (PLF) of ~91% in April 2023, against ~81% in April 2022 and ~88% in April 2019 (pre-Covid levels).

Despite a healthy recovery in passenger traffic, the domestic aviation industry continues to face challenges on account of elevated ATF prices and depreciation of the INR vis-à-vis the US$ compared to the pre-Covid era, both of which have a major bearing on the airlines’ cost structure. While the ATF prices have witnessed a sequential decline over the past four months, they still remain at elevated levels as compared to the pre-Covid era. The airlines’ efforts to ensure fare hikes proportionate to their input cost increases will be key to expanding their profitability margins.

In addition, supply-chain challenges being faced by airlines, which include the availability of spare parts and engine issues, have recently plagued the sector, resulting in the grounding of certain aircraft for some airlines, thus impacting their overall capacities. This also negatively impacts the cash flow generation of the airlines, given the high fixed-cost nature of the business.”

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