Domestic air passenger traffic soars 83% in April: ICRA

India's domestic air passenger traffic grew 83% year-on-year to around 1.05 crore in April 2022, which is about 5% lower than the pre-Covid-19 levels of April 2019, according to rating agency ICRA.

This comes a year after the second wave of the Covid-19 pandemic severely hit air travel across the country.

The airlines' capacity deployment last month was around 36% higher than April 2021, ICRA says, adding that capacity deployment in April has almost reached the pre-Covid-19 levels.

With the resumption of scheduled international operations from March 27, 2022, the international passenger traffic for Indian carriers in April 2022 surged to an estimated 18.5 lakh, marginally surpassing the international passenger traffic of around 18.3 lakh in April 2019.

On a sequential basis, departures in April were higher by around 2%, given the normalcy seen in business operations due to a significant dip in fresh Covid-19 infections, the rating agency says.

The rising aviation turbine fuel (ATF) prices continue to dampen the industry earnings, with prices in May 2022 being higher by 89.2% on a year-on-year basis, the report says.

ICRA continues to maintain a "Negative" outlook on the Indian aviation industry, reflecting its view that the financial performance of Indian airlines is likely to remain under pressure in the near term as recovery in domestic passenger traffic to pre-Covid-19 levels is likely only by FY24.

Escalating ATF prices will continue to pose a major threat to the profitability of the airlines in the near term, it adds.

The domestic passenger traffic stood at around 1.05 crore in April 2022 compared with about 1.07 crore in March 2022, indicating a marginal sequential decline of 2%, which is largely attributable to lower number of operational days in April than the preceding month, the report says.

Though recovery in passenger traffic is expected to be relatively fast paced in FY23, given the near normalcy situation seen in domestic airline operations, an overhang of any further Covid-19 wave looms on the sector in case the recent rise in infections in certain pockets of the country spreads nationwide, ICRA cautions.

The aviation industry is expected to report a loss of around ₹25,000-26,000 crore in FY22, ICRA says, adding that the onset of the Omicron wave along with continued high fuel prices delayed demand recovery in the last fiscal.

ICRA warns that the recovery in industry earnings in FY23 will be gradual due to the steep increase in fuel prices. However, the industry loss is expected to moderate to around ₹14,000-16,000 crore in FY23 due to the expected recovery in passenger traffic and lower debt due to reduction in debt of Air India before the sell-off, it says.

ICRA estimates that the domestic aviation industry operated at a passenger load factor (PLF) of around 80% in April 2022 compared with 60% in April 2021 and about 88% in April 2019.

The average number of passengers per flight during April 2022 was at 128, against an average of 133 passengers per flight in March 2022 and an average of 95 passengers per flight in April 2021.

On April 17, 2022, domestic passenger traffic at 407,975 crossed the 4-lakh daily passenger mark for the first time since the start of the pandemic.