‘Domestic air traffic marginally came down in April’ Says ICRA research report

Chennai: The domestic air passenger traffic last month marginally came down to about 132.8 lakh from about 133.7 lakh logged in March 2024, said ICRA in a research report.

ICRA report also said the domestic aviation industry is likely to close FY25 with a net loss of Rs 30-40 billion in FY2025.

According to the report, the April 2024 domestic air passenger traffic was higher by about 3.1 per cent on a year-on-year (YoY) basis and by about 21 per cent than pre-Covid levels.

For FY2024, domestic air passenger traffic was about 154 million with YoY growth of about 13 per cent, in line with its estimates, ICRA said.

The domestic air passenger traffic in FY2024, thus, surpassed the pre-Covid levels of about 142 million in FY2020.

Further, for FY2024, the international passenger traffic for Indian carriers stood at about 296.8 lakh, a YoY growth of about 24 per cents, and higher than the pre-COVID levels of about 227.3 lakh by 30 per cent.

In line with ICRA’s estimates, the international passenger traffic for Indian carriers in FY2024 also surpassed the peak levels of about 259.0 lakh in FY2019 (April-March 2019), the ICRA report said.

According to the report, the domestic aviation industry witnessed improved pricing power, reflected in the higher yields (over pre-Covid levels) and, thus, the revenue per available seat kilometre-cost per available seat kilometre (RASK-CASK) spread of the airlines.

ICRA expects the momentum in air passenger traffic seen in FY2024 is expected to continue into FY2025, though the further expansion in yields from the current levels may be limited.

As regards the recovery in the airline earnings, ICRA says it will be gradual owing to the high fixed cost.

The industry reported a net loss of about Rs 170-175 billion in FY2023 due to elevated aviation turbine fuel (ATF) prices twined with the depreciation of the Indian rupee against the US dollar.

ICRA expects the Indian aviation industry to report a similar net loss of about Rs 30-40 billion in FY2025 as seen in FY2024 as airlines continue to witness healthy passenger traffic growth and maintain pricing discipline.

Be that as it may, ICRA said the industry is facing supply chain challenges and issues of engine failures for the Pratt and Whitney (P&W) engines supplied to various airlines.

In FY2024, Go Airlines (India) Limited grounded half of its fleet due to faulty P&W engines, which led to the stalling of its operations. InterGlobe Aviation Limited (IndiGo) had also grounded more than 70 aircraft due to P&W engine issues, as of February 2, 2024, including an issue from powder metal (used to manufacture certain engine parts) contamination with its P&W fleet,” the report notes. According to ICRA, as per estimates, 24-26 per cent of the total fleet of Indian airlines in operations was grounded by March 31, 2024. (IANS)

Also Read: Domestic air passengers traffic volume surged to 30.55%: DGCA

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