Domestic air traffic records 59% yoy growth in FY22: ICRA
Near to normalcy in airline operations due to the waning impact of the pandemic resulted in a sequential growth of ~37% in domestic air passenger traffic to ~106 lakh in March 2022 compared to ~77 lakh in February 2022, and YoY growth of ~35% compared to ~78 lakh in March 2021. The airlines’ capacity deployment for March 2022 was ~12% higher than March 2021 (80,217 departures in March 2022 against 71,548 departures in March 2021). On a sequential basis, the number of departures in March 2022 were higher by around 42%, driven by the increased pace of vaccination and rapid abatement of the third wave of Covid-19, which allowed for quick lifting of travel restrictions.
Commenting further, Suprio Banerjee, Vice President & Sector Head, ICRA, said, “Domestic passenger traffic for FY2022 is estimated at ~84 million, YoY growth of ~59%, marginally higher than our estimate of 80-82 million, although it is ~40% lower than pre-Covid levels. For March 2022, the average daily departures were at ~2,588, higher than the average daily departures of ~2,308 in March 2021, and notably higher compared to ~2,023 in February 2022. The average number of passengers per flight during March 2022 was at 132, against an average of 135 passengers per flight in February 2022. Elevated ATF prices aggravated by geo-political issues will remain a near-term challenge for the industry and will be a key determinant of profitability for the industry.”
The ATF prices have surged by ~93% on a YoY basis in April 2022, given the elevated crude oil prices, due to the geo-political issues arising fro m the Russian invasion of Ukraine. The rising ATF prices continue to play spoilsport for the industry and will pose a serious threat to the sector earnings in FY2023. As a support measure for the Indian aviation industry, the Government has recently announced extension of the ECLGS by one year and increased the quantum of support, along with lower cost of funds for accessing non-fund-based limits. On an aggregate basis, recovering capacity utilisation levels will aid business performance, however, elevated ATF prices will continue to weigh on the earnings of Indian carriers in FY2023.