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Credit ratings agency Icra in its latest report has said that domestic airlines industry is expected to report a net loss of around Rs 15,000-17,000 crore this fiscal (FY23) on account of elevated price of Aviation Turbine Fuel (ATF) and a weak rupee. It stated the losses for the industry in the previous fiscal were estimated at around Rs 23,000 crore. Any positive or negative movement in rupee against the US dollar and any increase or decrease in the jet fuel prices have a major bearing on the cost structure of airlines as in India, ATF accounts for around 45 per cent of the operational cost of an airline while as much as 35-50 per cent of the airlines' operating expenses are US dollar driven.

Further, it stated the debt levels for the industry are expected to be at around Rs 1 lakh crore (including lease liabilities) as on March 31, 2023. Two listed airlines -- IndiGo and SpiceJet -- have reported losses to the tune of Rs 1,064 crore and Rs 789 crore, respectively, in the June quarter of FY23, primarily owing to a weak rupee and higher jet fuel prices. According to Icra, the domestic passenger traffic for Indian carriers reported a healthy 57.7 per cent year-on-year growth at 84.2 million in FY22 on the back of the fast pace of vaccination, lower incidence of fresh Covid infections, coupled with the declining intensity of the infection.

Moreover, it said on a year-on-year basis, in Q1 FY23, the domestic passenger traffic was higher by 2.04 times at 32.5 million while it was short by around 7 per cent compared to the pre-Covid level (Q1 FY20). It also said with the back-to-normalcy in the operating environment driven by the waning effect of the pandemic, domestic passenger traffic is expected to witness YoY growth of 52-54 per cent in FY23. It added a fast-paced recovery in domestic passenger traffic is expected in FY2023 aided by improving demand in both leisure and business travel segments. This is attributable to the receding infection level and consequent normalcy in the operating environment.