In a sign of ongoing recovery and resilience, India’s domestic air passenger traffic for May 2024 surged to approximately 138.9 lakh, marking a 5.2 per cent increase as compared to April 2024, according to ICRA’s latest report. This growth trend was also reflected in the year-on-year (YoY) comparison, with a notable 5.1 per cent uptick over May 2023. Even more impressively, the figure soared by approximately 14.0 per cent compared to pre-Covid levels, showcasing a robust rebound in air travel demand.
Per the report, the growth trajectory extended into the fiscal year 2024 (April-March), with domestic air passenger traffic reaching approximately 154 million, representing a YoY growth of around 13 per cent. This figure surpassed the pre-Covid levels of approximately 142 million in FY2020.
International passenger traffic for Indian carriers also witnessed a significant uptick, standing at approximately 296.8 lakh for FY2024, reflecting a YoY growth of approximately 24 per cent. This figure not only surpassed pre-Covid levels by 30 per cent but also exceeded the peak levels recorded in FY2019.
The positive momentum continued into the first two months of FY2025, with domestic air passenger traffic totaling around 270.9 lakh, marking a YoY growth of approximately 3.8 per cent over the same period in FY2024.
ICRA’s report highlights a stable outlook on the Indian aviation industry, citing the continued recovery in domestic and international air passenger traffic. The industry’s relatively stable cost environment and improved pricing power, manifested in higher yields over pre-Covid levels, further bolster confidence in the sector’s outlook for FY2025. However, ICRA also notes that further expansion in yields from current levels may be limited.
As per the report, despite these positive indicators, challenges persist, particularly concerning aviation turbine fuel (ATF) prices and currency fluctuations. While there has been a sequential decline in ATF prices, they remain elevated over pre-Covid levels. Average ATF prices stood at Rs 103,499/KL in FY2024, significantly higher than pre-pandemic levels. Moreover, approximately 30-40 per cent of airlines’ expenses are attributed to fuel costs, with a substantial portion denominated in dollar terms, making them susceptible to currency fluctuations.
In light of these challenges, airlines’ efforts to implement fare hikes commensurate with input cost increases will be critical to expanding profitability margins and sustaining the industry’s growth trajectory, the report underlined.