Domestic air traffic likely to grow 52-54% compared to last year: ICRA

Domestic air passenger traffic in India is likely to grow 52-54 percent on year and is likely to reach pre-COVID levels in 2022-23, rating agency ICRA said in its report.

Despite the recovery in passenger traffic, the rating agency expects the industry to report a loss between Rs 150-170 billion in 2022-23 due to high ATF prices and a depreciating rupee.

“Despite an expected improvement in passenger traffic, the industry is estimated to report a net loss of Rs. 150-170 billion in FY2023 (as against an estimated net loss of ~Rs. 230 billion in FY2022), due to elevated aviation turbine fuel (ATF) prices and the recent depreciation of INR vis-à-vis the US$, both of which have a major bearing on the cost structure of airlines," Suprio Banerjee, Vice President & Sector Head, ICRA said.

The rating agency said that domestic airlines in India are still reporting an unfavorable spread in their revenue per available seat kilometre–cost per available seat kilometre (RASK-CASK) due to the significant surge in costs and the limited ability of the airlines to pass on the same to the customers.