In a recent report, aviation advisory and research firm CAPA India have projected a robust growth of approximately 15% in India’s air traffic, reaching 155 million passengers during the fiscal year 2023-24.
This optimistic forecast aligns with the firm’s earlier estimate in March 2023, despite the unexpected grounding of Go First earlier this year.
The report highlights the resilience of domestic air traffic in India, even with over 150 aircraft still grounded due to supply chain issues and other challenges. The advisory firm notes that the number of grounded aircraft could potentially exceed 200 by the end of March 2024, leading to a shortage of parking bays and exacerbating parking challenges across the country.
Domestic air traffic expected to rise 15 per cent
India’s international air traffic has also exhibited growth in line with CAPA’s guidance, with an anticipated year-end figure of around 70 million passengers. Despite the challenges faced by the aviation industry, overall profitability is expected to align with CAPA’s initial projection of a USD 1.648 billion loss. Full-service carriers are estimated to account for USD 1.4-1.5 billion of this loss, while low-cost carriers are expected to incur losses in the range of USD 200-300 million.
IndiGo likely to achieve a record profit
The outlook for low-cost carriers’ losses has been revised downwards, thanks to IndiGo’s exceptional profitability in the first quarter. IndiGo is predicted to achieve a record profit of USD 500 million, despite facing operational challenges in FY2024 due to Pratt & Whitney engine issues.
Expansion efforts by Air India Group
The report also highlights the expansion efforts of the Air India Group, set to add over 60 aircraft by the end of the financial year. This includes additions to Air India, Air India Express, and Vistara, bringing the total fleet close to 300 aircraft.
However, the advisory firm points out that India’s operational fleet remains severely constrained. By the end of the year, out of a projected 789 aircraft on the register, only 588 are expected to be operational. Airlines like IndiGo and SpiceJet are addressing capacity shortfalls by inducting aircraft on wet lease, with up to 30 wet-leased aircraft anticipated to be operating in India by March 2024.
Regarding ticket prices, the report notes that domestic and international fares are gradually normalizing from post-pandemic highs, despite the ongoing challenges related to the shortage of aircraft.