Domestic air passenger traffic rose 5% to 10.2 mn in August: ICRA

Domestic air passenger traffic rose 5 per cent to 1.02 crore in August and a fast-paced recovery in the traffic is expected this fiscal on the back of normalcy in flight operations and widening vaccination coverage, according to rating agency Icra.

Releasing the monthly domestic air passenger traffic data for August on Thursday, Icra further said that international traffic for Indian carriers surpassed the pre-COVID level of around 19.8 lakh by 32 per cent.

"The domestic aviation industry continues to witness recovery, with domestic passenger traffic for August 2022 estimated at around 102 lakh, around 5 per cent higher compared to around 97 lakh in July 2022 and around 52 per cent higher in comparison to the domestic passenger traffic in August 2021, although it fell short by around 14 per cent, compared to pre-COVID levels i.e. August 2019," Icra's Suprio Banerjee said.

Banerjee is the Vice President & Sector Head - Corporate Ratings at Icra Ltd.

In the first five months of this fiscal, domestic passenger traffic is estimated at nearly 5.24 crore, a year-on-year growth of nearly 131 per cent.

Icra noted that the airline's capacity deployment in August was around 37 per cent, compared to the year-ago period but lower by nearly 10 per cent than the pre-COVID level.

It also said that a quick recovery in domestic passenger traffic is expected in FY2023, aided by normalcy in operations and waning pandemic.

However, the earnings recovery for domestic airlines will be slow-paced due to elevated ATF prices in addition to the rupee depreciation against the USD amid a heightened competitive environment, it added.

"A steady rise in prices of Aviation Turbine Fuel (ATF) and a general inflationary environment continue to dampen the industry earnings, with ATF prices in September 2022 higher by nearly 83 per cent on a year-on-year basis.

"However, the same declined by 0.7 per cent sequentially," Icra said.