The rating agency ICRA has revised the outlook for the Indian aviation industry to stable from negative, given the fast-paced recovery in domestic passenger traffic in FY2023 and the expected continuation of the same in FY2024.
Moreover, the industry has witnessed improved pricing power, as reflected in the healthier yields and thus the revenue per available seat kilometer- cost per available seat kilometer (RASK-CASK) spread of the airlines.
The same is expected to continue, given the sequential decline in aviation turbine fuel (ATF) prices from the peak of June 2022 and the anticipation of relatively stable foreign exchange rates.
The rating agency projected domestic passenger traffic growth at 8-13 percent in FY2024, post the 55-60 percent expansion in FY2023, to reach 145-150 million, which is much higher than the pre-Covid levels.
During 10M FY2023, domestic passenger traffic, at 111 million, witnessed a YoY increase of 66.2 percent and trailed the pre-Covid levels (10M FY2020) by only 8.3 percent.
Further, international passenger traffic for Indian carriers is on a growth trajectory with the resumption of scheduled international operations since March 27, 2022, and was lower only by 2.4 percent in 9M FY2023 when compared to pre-Covid levels.
It estimates international passenger traffic for Indian carriers to witness a YoY growth of 10-15 percent in FY2024, post the 125-130 percent expansion in FY2023.
The international passenger traffic for Indian carriers is likely to surpass the pre-Covid levels in FY2023 itself while exceeding the peak of FY2019 in FY2024, it added.
Meanwhile, over the medium term, growth in the Indian airline sector will be driven by improving airport infrastructure in addition to the Government’s concerted efforts to promote regional tourism.
