Domestic aviation sector shows signs of recovery; passenger traffic up by 60% in FY23

On Wednesday, ICRA announced that the domestic aviation sector is seeing a recovery, with air passenger traffic growing around 60% annually to 13.60 crores in FY23. Despite this growth, domestic air passenger traffic is still 4% below the pre-pandemic (FY20) level of 14.15 crore, according to the credit rating agency.

ICRA reported that Indian carriers transported a total of 8.52 crore passengers on local routes in the fiscal year ending March 2022.

Suprio Banerjee, Vice President at ICRA, stated that domestic passenger traffic reached 1.30 crore in March 2023, a 22% increase from the March 2022 volume of 1.06 crore.

He stated that in FY23, there was a 38% increase in the airlines’ overall capacity deployment compared to FY22.

ICRA reported that last month, the airlines‘ capacity deployment was 14% higher year-on-year and approximately 7% higher than the pre-COVID level in March 2019.

According to ICRA, the estimated domestic passenger load factor for the airline industry in March 2023 is 89%, which is higher than 82% in the same period last year and slightly lower than 87% in March 2019 (pre-COVID levels).

According to Banerjee, the domestic aviation sector is still confronting hurdles despite a robust rebound in passenger traffic. The industry is grappling with higher aviation turbine fuel prices and the depreciation of the Indian rupee against the US dollar. These factors significantly impact the cost structure of airlines.

Banerjee emphasized that airlines must raise fares in proportion to the rise in input costs to improve their profit margins. This would be crucial for airlines to enhance their profitability margins.

Also Read: Latest Indian Aviation News and Aviation News

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