Domestic Air Traffic Reports 9% YoY Growth In July: Report
Icra states that with the elevated aviation turbine fuel (ATF) prices and the depreciation of the Indian rupee, the improvement in yields is likely to remain monitorable
On the back of a continued recovery resulting in higher yields, improved pricing power and a relatively stable cost environment, the domestic air passenger traffic reported a nine per cent year-on-year (YoY) growth in July 2024 as the traffic was estimated at 1.31 crore during the month, according to a report by Icra. The airlines’ capacity deployment witnessed a five per cent YoY in July.
The domestic air passenger traffic in July 2024 was higher by 10.4 per cent than the pre-Covid levels. The total traffic in the segment for four months of the financial year 2025 (April to July) was 5.33 crore, indicating a five 5.2 per cent YoY growth compared to the same period a year ago. The international passenger traffic for the Indian carriers was 80.5 lakh in Q1FY25, registering 16.7 per cent YoY growth, according to the report.
However, with the elevated aviation turbine fuel (ATF) prices and the depreciation of the Indian rupee, the improvement in yields is likely to remain monitorable, Icra noted. These two factors play a major role in the cost structure of the airlines. Icra stated, “In the five months of FY 25 (5M FY2025), the average ATF price of Rs 99,468 per kilolitre was higher by four per cent on a YoY basis.” However, the prices in August 2024 were lower by 2.2 per cent on a YoY basis over August 2023.
Icra highlighted the supply chain challenges faced by the industry due to the issues of engine failures for Pratt and Whitney (P and W) engines. In FY2024, Go Airlines (India) grounded nearly half of its fleet due to such issues, while InterGlobe Aviation (IndiGo) also grounded over 70 aircraft due to the engine issue, as mentioned in the Icra report.
As far as the pace of recovery in the industry earnings is concerned, Icra expects the Indian aviation industry to report a net loss of Rs 30 to 40 billion in FY2025, similar to the FY2024 numbers. However, the loss is significantly lower than Rs 170 to 175 billion loss in FY 2023, which indicates the growth in passenger traffic.
