MUMBAI: Domestic air passenger traffic is estimated at about 154 million for FY2024, which represents a YoY growth of roughly 13%, said credit rating agency ICRA in a recent report. With this the domestic air passenger traffic in FY2024 has surpassed the pre-Covid levels of about 142 million in FY2020.
“The domestic air passenger traffic for March 2024 is estimated at about 13.5 million, higher than 6.9% in comparison to the 12.6 million in February 2024.Further it grew by about 4.9% on a YoY basis, wherein the traffic in March 2023 stood at 12.9 million,” said the report. The airlines’ capacity deployment in March 2024 was higher by ~2% than that of March 2023 and was higher by 9% over February 2024.
It is estimated that the domestic aviation industry operated at a passenger load factor (PLF) of about 90% in March 2024, against 88% in March 2023 and 89% in February 2024.
In FY2024, the ATF prices witnessed a sequential decline till June 2023. Post which, it increased sequentially till October 2023. However, it decreased sequentially again by 6% in November 2023, 5% in December 2023, 4% in January 2024 and by 1% in February 2024. 2024. Although in March 2024, the prices were marginally higher sequentially by 0.5%, it again declined by 0.4% in April 2024, following the trend in crude oil prices, the report said. Average ATF prices in FY2024, was lower by 14% compared to that of FY2023, but was significantly higher by 58% than the pre-Covid levels of FY2020, it added.
“Despite a healthy recovery in air passenger traffic and improvement in yields, the movement of the latter will remain monitorable amid elevated aviation turbine fuel (ATF) prices and depreciation of the INR vis-à-vis the USD over pre-Covid levels, both of which have a major bearing on the airlines’ cost structure,” it said. Average ATF prices stood at Rs. 1,03,499/KL in FY2024, which was lower by 14% than Rs. 1,21,013/KL in FY2023, but significantly higher by 58% than the pre-Covid levels of Rs. 65,368/KL in FY2020. In April 2024, ATF prices remained range-bound at March 2024 levels, but were higher by 3.1% on a YoY basis. Fuel cost accounts for about 30-40% of the airlines’ expenses, while about 45-60% of the operating expenses—including aircraft lease payments, fuel expenses and a significant portion of aircraft and engine maintenance expenses—are denominated in dollar terms. Furthermore, some airlines have foreign currency debt. While domestic airlines have a partial natural hedge to the extent of their earnings from international operations, overall, their net payables are in foreign currency. The airlines’ efforts to ensure fare hikes, proportional to their input cost increases, will be the key to expanding their profitability margins, said the report.
ICRA said its outlook on the Indian aviation industry is stable, amid the continued recovery
in domestic and international air passenger traffic, and relatively stable cost environment and expectations of the trend continuing in FY2025. “Moreover, the industry witnessed improved pricing power, reflected in the higher yields (over pre-Covid levels) and, thus, the revenue per available seat kilometre—i.e., cost per available seat kilometre (RASK-CASK) spread of the airlines. The momentum in air passenger traffic witnessed in FY2024 is expected to continue into FY2025, though further expansion in yields from the current levels may be limited,” it said.
“The domestic air passenger traffic for March 2024 is estimated at about 13.5 million, higher than 6.9% in comparison to the 12.6 million in February 2024.Further it grew by about 4.9% on a YoY basis, wherein the traffic in March 2023 stood at 12.9 million,” said the report. The airlines’ capacity deployment in March 2024 was higher by ~2% than that of March 2023 and was higher by 9% over February 2024.
It is estimated that the domestic aviation industry operated at a passenger load factor (PLF) of about 90% in March 2024, against 88% in March 2023 and 89% in February 2024.
In FY2024, the ATF prices witnessed a sequential decline till June 2023. Post which, it increased sequentially till October 2023. However, it decreased sequentially again by 6% in November 2023, 5% in December 2023, 4% in January 2024 and by 1% in February 2024. 2024. Although in March 2024, the prices were marginally higher sequentially by 0.5%, it again declined by 0.4% in April 2024, following the trend in crude oil prices, the report said. Average ATF prices in FY2024, was lower by 14% compared to that of FY2023, but was significantly higher by 58% than the pre-Covid levels of FY2020, it added.
“Despite a healthy recovery in air passenger traffic and improvement in yields, the movement of the latter will remain monitorable amid elevated aviation turbine fuel (ATF) prices and depreciation of the INR vis-à-vis the USD over pre-Covid levels, both of which have a major bearing on the airlines’ cost structure,” it said. Average ATF prices stood at Rs. 1,03,499/KL in FY2024, which was lower by 14% than Rs. 1,21,013/KL in FY2023, but significantly higher by 58% than the pre-Covid levels of Rs. 65,368/KL in FY2020. In April 2024, ATF prices remained range-bound at March 2024 levels, but were higher by 3.1% on a YoY basis. Fuel cost accounts for about 30-40% of the airlines’ expenses, while about 45-60% of the operating expenses—including aircraft lease payments, fuel expenses and a significant portion of aircraft and engine maintenance expenses—are denominated in dollar terms. Furthermore, some airlines have foreign currency debt. While domestic airlines have a partial natural hedge to the extent of their earnings from international operations, overall, their net payables are in foreign currency. The airlines’ efforts to ensure fare hikes, proportional to their input cost increases, will be the key to expanding their profitability margins, said the report.
ICRA said its outlook on the Indian aviation industry is stable, amid the continued recovery
in domestic and international air passenger traffic, and relatively stable cost environment and expectations of the trend continuing in FY2025. “Moreover, the industry witnessed improved pricing power, reflected in the higher yields (over pre-Covid levels) and, thus, the revenue per available seat kilometre—i.e., cost per available seat kilometre (RASK-CASK) spread of the airlines. The momentum in air passenger traffic witnessed in FY2024 is expected to continue into FY2025, though further expansion in yields from the current levels may be limited,” it said.
