The Indian aviation sector is having a smooth flight in terms of increasing passenger traffic this fiscal year, according to a study by ICRA. According to the credit rating agency, for May 2023, the domestic air passenger traffic was estimated at about 131.8 lakh, about 2.3 per cent higher than about 128.9 lakh in April 2023. It also witnessed a year-on-year (YoY) growth of about 15 per cent, compared to May 2022. Domestic passenger traffic in May 2023 was higher by about 8 per cent compared to the pre-Covid levels (that is, May 2019).
The airlines' capacity deployment in May 2023 was higher by about 1.4 per cent than that of May 2022, reaching the pre-Covid levels (May 2019). For FY23, international passenger traffic for Indian carriers stood at approximately 239.4 lakh, thereby improving from the pre-Covid (FY20) levels of about 227.2 lakh, although 8 per cent lower than the peak levels of about 259 lakh of FY19.
Further, for April 2023, international passenger traffic for Indian carriers stood at around 21.8 lakh, higher than the pre-Covid (April 2019) levels of about 18.3 lakh by 20 per cent.
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ICRA's outlook on the Indian aviation industry has been revised to Stable from Negative in the recent past, on the back of fast-paced recovery in domestic passenger traffic in FY2023 and expected continuation of the same in FY2024.
Moreover, the industry witnessed improved pricing power, as reflected in the improved yields and thus the revenue per available seat kilometre - cost per available seat kilometre (RASK-CASK) spread of the airlines.
The same is expected to continue as the industry regains some pricing discipline, coupled with the sequential decline in aviation turbine fuel (ATF) prices as witnessed over the last five months and relatively stable foreign exchange rates, ICRA said.