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Domestic air passenger traffic up by 96% in Jan from last year: Icra

Domestic air passenger traffic touched 1.25 crore in January this year, an increase of 96 per cent compared to the year-ago period, according to rating agency Icra

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Press Trust of India Mumbai
2 min read Last Updated : Feb 08 2023 | 10:41 PM IST

Domestic air passenger traffic touched 1.25 crore in January this year, an increase of 96 per cent compared to the year-ago period, according to rating agency Icra.

However, it said the traffic remained around 2 per cent lower compared to the pre-Covid levels -- January 2020. The traffic stood at 64 lakh in January last year.

Icra is maintaining a negative outlook on the Indian aviation industry, reflecting the view that the financial performance of Indian airlines is likely to remain under pressure in the near term, even though the recovery in domestic passenger traffic has been healthy.

While a meaningful improvement in passenger traffic is expected in FY2023, the pace of recovery in the industry earnings will be gradual, it said on Wednesday.

Icra noted that the net loss in FY2023 is expected to be notably lower compared to Rs 235 billion (RS 23,500 crore) net loss in FY2022, primarily due to recovery in passenger traffic, fare hikes and lower interest burden.

In January this year, airlines' capacity deployment was higher by around 42 per cent than January 2022 while it was lower by about 6 per cent than the pre-Covid levels.

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"FY2023 is witnessing a quick recovery in domestic passenger traffic, aided by normalcy in operations and the waning impact of the pandemic.

"However, the earnings recovery for domestic airlines will be gradual due to elevated Aviation Turbine Fuel (ATF) prices in addition to the depreciation of the Indian rupee against the US dollar amid a heightened competitive environment," Suprio Banerjee, vice president and sector head for corporate ratings at Icra Ltd, said.

Elevated ATF prices and a general inflationary environment continue to dampen the industry earnings, with jet fuel prices in February 2023 higher by around 32 per cent on a year-on-year basis. Although, the prices remained lower by around 4 per cent sequentially, Icra said.

The rating agency noted that elevated ATF prices will continue to pose a major threat to earnings and the liquidity profile of the airlines in the near-to-medium-term.

Also, the depreciation of the Indian rupee against the US dollar which adversely impacts lease rentals, maintenance cost and other overheads will have a major bearing on the airlines' cost structure.

The airlines' efforts to ensure fare hikes proportionate to their input cost increases will be key to expanding their profitability margins, it added.

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Topics :domestic air travelICRACivil Aviation

First Published: Feb 08 2023 | 8:11 PM IST

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