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Building on the fast-paced recovery in FY23, Credit rating agency ICRA in its latest report has said that the domestic air passenger traffic is expected to grow by 8-13% in FY24, thus reaching 150-155 million, surpassing the pre-Covid levels of 141.2 million seen in FY20. It said the momentum is expected to continue in FY25 as well with a similar estimated YoY growth, aided by rising demand for air travel and improving airport infrastructure. 

According to the report, during 8M FY24, domestic air passenger traffic stood at 100.7 million, witnessing a YoY growth of 17%, and 5% higher than the pre-Covid levels (8M FY20) of 95.7 million. Further, the international passenger traffic for Indian carriers, at 23.9 million in FY23, surpassed the pre-Covid levels, although it trailed the peak levels of 25.9 million in FY19. The same is expected to cross this level in the current fiscal (FY24), with an estimated 25-27 million passengers. Moreover, the airlines witnessed better pricing power, as reflected in improved yields and in the spread between revenue per available seat kilometre and cost per available seat kilometre (RASK-CASK) for the airlines. ICRA thus maintains its Stable outlook on the industry in view of healthy passenger traffic growth, improved yields and stable cost environment.

It further stated that despite a healthy recovery in passenger traffic and improvement in yields, the movement of the latter will remain monitorable amidst elevated ATF prices and depreciation of the INR vis-a-vis the $ compared to pre-Covid levels, both of which have a major bearing on the airlines’ cost structure. The average ATF prices stood at Rs 103,189/KL in 9M FY2024, 59% higher compared to an average of Rs 64,715/KL during FY2020, albeit a decline of 17% compared to Rs 121,013 /KL in FY2023.