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There has been a robust growth in domestic air passengers in the month of October 2024, both on a month-on-month and year-on-year basis. As per the latest data by ICRA, approximately 138.5 lakh people travelled by air in the month of October 2024, which was 9.6 per cent more than the numbers in October last year and 6.3 per cent more than September 2024. The numbers of October 2024 was more than 12 per cent higher than the pre-Covid numbers.
The airlines’ capacity deployment in October 2024 was higher than October 2023 by nearly 7.6 per cent and higher by about 5.7 per cent over September 2024. For the seven months of FY2025 (April–October 2024), domestic air passenger traffic was 932.0 lakh, a YoY growth of about 5.9 per cent and approx 12.6 per cent higher than the pre-Covid level of 827.5 lakh in 7M FY2020.
Further, for H1 FY2025, the international passenger traffic for Indian carriers stood around 162.6 lakh, a YoY growth of about 16 per cent, and higher than the pre-Covid level of 111.0 lakh by 46.5 per cent. The report expects International passenger traffic for Indian carriers to grow by 15-20 per cent in FY2025. Predicting a stable outlook to the Indian aviation industry based on the expectations of moderate growth in domestic air passenger traffic and a relatively stable cost environment in FY2025.
ICRA estimated that the domestic aviation industry operated at a passenger load factor (PLF) of 80 per cent in August 2022, against 72 per cent in August 2021 and 85 per cent in August 2019. The international passenger traffic for Indian carriers in August 2022 strongly surpassed the pre-Covid level of 19.8 lakh by 32 per cent.
Moreover, the industry witnessed improved pricing power during FY2024, reflected in the higher yields (over pre-Covid levels) and, thus, the revenue per available seat kilometre–cost per available seat kilometre (RASK–CASK) spread of the airlines. The momentum in the air passenger traffic witnessed in FY2024 is likely to marginally taper down to 7-10 per cent in FY2025 (compared to 13 per cent in FY2024), given the high base of FY2024 and lower passenger traffic in Q1 FY2025, impacted by severe heat waves and other weather-related disruptions, the ICRA report notes.
The yields are also likely to be under pressure, as airlines strive to maintain adequate passenger load factor (PLF) amid elevated aviation turbine fuel (ATF) prices.
The pace of recovery in industry earnings is likely to be gradual owing to the high fixed-cost nature of the business. ICRA expects the Indian aviation industry to report a net loss of INR. 20-30 billion in FY2025 and FY2026 compared to about Rs. 10 billion in FY2024 due to anticipated pressure on yields as airlines strive to maintain adequate PLF amid continued elevated ATF prices.
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