According to ratings agency Icra, the rapid rebound in domestic air passenger traffic is anticipated to continue into the second half of the current fiscal year.
Icra predicts that there will have been 12.3 million domestic air travelers in September. Despite being 1.3 per cent lower than August, this is still close to 19 per cent higher than the same time last year and about 7 per cent higher than the pre-covid figure for September 2019, according to a report by Mint.
Domestic air travel increased by 20 per cent from April to September compared to the same time last year and by 7 per cent over the equivalent period in 2019.
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“Icra’s outlook on the Indian aviation industry is stable on the back of the fast-paced recovery in domestic passenger traffic in FY2023 and H1 FY2024 and expectations of the trend continuing in H2 FY2024. Moreover, the industry witnessed improved pricing power, reflected in the improved yields and thus the revenue per available seat kilometre – cost per available seat kilometre (RASK-CASK) spread of the airlines," the rating agency said.
Despite a healthy rebound in air passenger traffic, ICRA has reiterated that the domestic aviation industry still faces difficulties due to high aviation turbine fuel prices and the Indian rupee's decline against the US dollar since Covid, both of which have a significant impact on the cost structure of the airlines.
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The cost of fuel represents roughly 30–40 per cent of airline expenses, and nearly 45–60 per cent of operating costs, which include fuel costs, lease payments for aircraft, and a sizable portion of costs for maintaining aircraft and engines, are expressed in US dollar terms.
