Domestic Air Passenger Numbers Expected to Exceed Pre-Covid Levels, Reach 150-155 Million: Icra

Credit ratings agency Icra predicts that domestic air passenger traffic will surpass pre-Covid levels, reaching 150-155 million in the current fiscal year. This anticipated growth is estimated to be between 8-13%, exceeding the pre-pandemic figure of 141.2 million. Icra also forecasts a substantial reduction in the industry’s net loss for the next two fiscal years. Despite ongoing challenges like supply-chain issues and engine failures, Icra maintains a “stable” outlook on the domestic aviation industry.

The positive momentum in traffic growth is expected to continue into FY2025, with a similar year-on-year growth, supported by increased demand for both leisure and business travel and improvements in airport infrastructure.


For Indian carriers, international passenger traffic has already surpassed pre-Covid levels in FY2023, although it has not yet reached the peak levels seen in FY2019. Icra anticipates that international passenger traffic will cross this level in the current fiscal, reaching an estimated 25-27 million passengers, representing a year-on-year growth of 7-12%. Further growth is projected in FY2025, with a 7-12% increase to 27-29 million passengers.

Improved pricing power, seen in increased yields and favorable revenue-cost ratios, is contributing to the industry’s positive outlook. The decline in aviation turbine fuel (ATF) prices and relatively stable foreign exchange rates are expected to support this trend. Icra estimates that the industry will report significantly lower net losses of Rs 300-4,000 crore in FY2024 and FY2025, compared to Rs 170-175 billion in FY2023.

According to Icra, the prices of ATF and the Indian rupee-US dollar exchange rate play a crucial role in the airlines’ cost structure. The average ATF price for the April-February period of FY2024 experienced a year-on-year decline of 15%, standing at Rs 103,547/KL. Although higher than the average of Rs 64,715/KL during FY2020, this figure represents a 60% decrease compared to FY2023’s average of Rs 120,978/KL. Fuel costs account for approximately 30-40% of airlines’ expenses.

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