Home / News / India /  Domestic air passenger traffic up 96% to touch 1.25 cr in Jan: Icra

Domestic air passenger traffic in January 2023 saw a growth of 96 per cent to touch 1.25 crore. It is just 2 per cent short of pre-Covid levels, according to rating agency Icra. The traffic stood at 64 lakh in January last year.

Icra has maintained a negative outlook and said that Indian airlines is likely to remain under pressure in the near term, even though recovery in domestic passenger traffic has been healthy. Elevated ATF prices will continue to pose a major threat to earnings and the liquidity profile- of the airlines in the near to medium term.

“This apart, the entry of low-cost domestic carrier, Akasa Air, and likely near-term relaunch of Jet Airways will further intensify competition in the domestic aviation industry. The airlines’ efforts to ensure fare hikes proportionate to their input cost increases, will be the key to expand their profitability margins," said Icra in its report.

Icra noted that the net loss in FY23 is expected to be notably lower compared to 235 billion net loss in FY22, primarily due to recovery in passenger traffic, fare hikes and lower interest burden.

In January this year, airlines' capacity deployment was higher by around 42 per cent than January 2022 while it was lower by about 6 per cent than the pre-Covid levels.

“FY2023 is witnessing a quick recovery in domestic passenger traffic, aided by normalcy in operations and the waning impact of the pandemic. However, the earnings recovery for domestic airlines will be gradual due to elevated Aviation Turbine Fuel (ATF) prices in addition to the depreciation of the Indian rupee against the US dollar in the backdrop of heightened competitive environment," said Icra report.

High ATF prices and a general inflationary environment continue to dampen the industry earnings, with jet fuel prices in February 2023 higher by around 32 per cent on a year-on-year basis. Although, the prices remained lower by around 4 per cent sequentially, Icra said.

The airlines' efforts to ensure fare hikes proportionate to their input cost increases will be key to expanding their profitability margins, it added.

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