Recent data released by ICRA, a prominent credit rating agency, reveals a significant uptick in domestic air passenger traffic across India during the month of May.
The report indicates a notable increase, with approximately 138.9 lakh passengers recorded, marking a 5.2 percent rise from April’s figures, which stood at 132.0 lakh passengers.
Compared to May 2023, this surge represents a 5.1 percent year-on-year (YoY) growth.
Impressively, it also surpasses pre-COVID levels by a substantial 14 percent, showcasing a resilient recovery in the aviation sector despite ongoing challenges.
The report delves deeper into the factors driving this growth, highlighting a 6 percent expansion in capacity deployment by airlines compared to May 2023, and a 2 percent increase over April 2024.
For the fiscal year 2024 (FY2024), which spans from April to March, domestic air passenger traffic totaled approximately 154 million passengers, indicating a robust YoY growth of 13 percent.
Notably, the report sheds light on the international segment as well, indicating remarkable growth in international passenger traffic for Indian carriers.
In FY2024, international passenger traffic stood at approximately 296.8 lakh, reflecting a substantial 24 percent YoY increase.
This figure surpasses pre-COVID levels by 30 percent, indicating a strong resurgence in international travel post-pandemic.
Looking at the current fiscal year, FY2025, the report reveals that in the first two months (April-May 2024), domestic air passenger traffic reached around 270.9 lakh, signaling a 3.8 percent YoY growth over the same period in FY2024.
Challenges In Aviation Industry Amid Recovery
However, amidst this recovery, the report also highlights challenges faced by the aviation industry, particularly regarding cost structures.
Elevated aviation turbine fuel (ATF) prices and the depreciation of the Indian Rupee against the US Dollar remain significant concerns.
The average ATF price in FY2024 was notably higher by 58 percent compared to pre-COVID levels in FY2020, despite a 14 percent decrease from FY2023.
Fuel costs, accounting for 30-40 percent of airlines’ expenses, coupled with a significant portion of operating expenses denominated in dollar terms, pose financial challenges.
The report emphasizes the importance of fare hikes to offset rising input costs and expand profitability margins.
While some airlines benefit from adequate liquidity and strong parental support, others face liquidity challenges, despite improvements relative to previous years.
The report underscores the need for strategic measures to navigate these uncertainties and sustain the industry’s recovery trajectory.
The latest data reflects a promising rebound in domestic and international air travel in India, underscored by resilient growth figures.
However, ongoing challenges necessitate proactive measures to ensure sustained recovery and profitability in the aviation sector.
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