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Credit ratings agency ICRA in its latest report has said that domestic air passenger traffic grew 5.1 per cent year-on-year to an estimated 13.89 million in May 2024 and was significantly higher by around 14 per cent than pre-Covid levels. It also said the outlook on the Indian aviation industry is stable amid the continued recovery in domestic and international air passenger traffic with a relatively stable cost environment and expectations of the trend continuing in FY2025. It added that the airlines' capacity deployment in May increased 6 per cent year-on-year and about 2 per cent higher than April 2024.

According to the report, the domestic air passenger traffic for FY24 was around 154 million, with a year-on-year growth of around 13 per cent. It thus surpassed the pre-COVID levels of around 142 million in FY20. It also said the international passenger traffic for Indian carriers stood at around 29.68 million in FY24, registering a year-on-year growth of around 24 per cent. Moreover, the industry witnessed improved pricing power, reflected in the higher yields (over pre-Covid levels). It stated that the momentum in air passenger traffic witnessed in FY24 is expected to continue into FY25. However, it said further expansion in yields from the current levels may be limited. 

The report further said despite a healthy recovery in air passenger traffic and improvement in yields, the movement of the latter will remain monitorable amid elevated aviation turbine fuel (ATF) prices and depreciation of the INR vis-a-vis the USD over pre-Covid levels, both of which have a major bearing on the airlines' cost structure. Average ATF price stood at Rs 103,499/KL in FY24, 14 per cent lower than Rs 121,013/KL in FY23 but significantly higher by 58 per cent than the pre-Covid levels of Rs 65,368/KL in FY20. In Q1 FY25, the average ATF price remained higher by 5.4 per cent on a year-on-year basis. In June 2024, it declined by 6.5 per cent sequentially.