Published by: Para Yadav
Last update: March 14, 2023, 12:54 PM IST
Image used for illustration. (Photo: IANS)
Daily departures averaged 2,967, up from 2,044 in February 2022 and 2,900 in January 2023, but down from 3,137 in February 2020
Domestic passenger traffic will increase 54 percent year-on-year in February but decline 5 percent sequentially, according to rating agency ICRA.
Daily departures averaged 2,967, up from 2,044 in February 2022 and 2,900 in January 2023, but down from 3,137 in February 2020.
The average number of passengers per flight was 143, up from 139 passengers per flight in February 2022.
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“The domestic aviation industry continues to experience recovery, with domestic passenger traffic estimated at 119 lakh for February 2023, 54 per cent higher than domestic passenger traffic of 77 lakh in February 2022 and only 4 per cent lower than pre-Covid, i.e. 123 lakh in February 2020,” said Suprio Banerjee, Vice President & Sector Head — Corporate Ratings, ICRA Limited
He added that it was sequentially 5 percent lower than the 125 lakh in January 2023.
For 11-month FY2023 (April-February 2023), domestic passenger traffic is estimated at 1,229 lakh, a 65 per cent year-on-year growth compared to 745 lakh in 11-month FY2022 (April-February 2022) and only 8 per cent lower than 1,338 lakh in April-February 2020.
“Airline capacity utilization in February 2023 was 45 per cent higher than in February 2022. However, it was 9 per cent lower than before Covid. It is estimated that the domestic airline industry operated with a passenger load factor (PLF) of 90 percent in February 2023, compared to 85 percent in February 2022 and 88 percent in February 2020,” he added.
Given the above facts, ICRA had recently changed its outlook on the Indian airline industry from negative to stable due to the rapid recovery in domestic passenger traffic and improved pricing power.
It is estimated that the industry will report a net loss of Rs 110-130 billion in FY2023, but that is much less than ICRA’s earlier estimated net loss of Rs 235 billion.
The pace of earnings recovery will be gradual due to the high fixed costs of the business. The capacity expansion is expected to improve the RASK-CASK spread through better pricing discipline.
The industry is expected to report a smaller net loss of Rs.50-70 billion in FY2024.
However, despite a healthy recovery in passenger traffic, the domestic aviation industry continues to face challenges due to increased ATF prices and the depreciation of the INR against the US dollar, both of which have a major impact on the development of the airlines’ cost structure.
“Airlines’ efforts to ensure fare increases relative to their input cost increases will be key to expanding their profitability margins,” commented Banerjee.
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