Domestic air traffic grows 10% in Oct: ICRA

Domestic air passenger traffic witnessed a surge of 10% in October this year, owing to an increase in demand due to the festive season, according to a report by the rating agency ICRA. The domestic air passenger traffic stood at 114 lakh in October this year as compared to 103 lakh in September this year.

Domestic air traffic witnessed a growth of 26% year-on-year (YoY) in October 2022, as compared to October 2021. However, compared to the pre-covid levels of 2019, domestic air passenger traffic declined by 8% in October this year. 

Between April and October this year, the domestic air passenger traffic witnessed a year-on-year (YoY) growth of 91% at 740 lakh domestic passengers, as compared to the same period last year. However, compared to the months of April to October in 2019, it witnessed a decline of 11%.

Meanwhile, the airlines’ capacity deployment in October 2022 witnessed a growth of 16% as compared to October 2021. But, it witnessed a decline of 11% as compared to the pre-covid levels of October 2019, according to the report.

Moreover, in the first six months of FY23, the international passenger traffic for Indian carriers stood at approximately 99 lakh, thereby inching towards the pre-covid H1 level which stood at approximately 111 lakh.

However, the rating agency is of the view that the financial performance of Indian airlines will continue to remain under pressure owing to an increase in jet fuel prices and depreciating rupee. Owing to this, the pace of recovery in the industry earnings will be sluggish and the industry is expected to incur a net loss of ₹15,000 crore in FY23, as against an estimated loss of ₹23,000 crore in FY22. 

“Rising prices of aviation turbine fuel (ATF) and the general inflationary environment continue to stifle the industry earnings, with ATF prices in November 2022 being higher by approximately 47% on a YoY basis. Moreover, the same increased by 4.2% sequentially. While airlines have been increasing the yields, the same has not been adequate to offset the impact of the rising ATF prices, in ICRA’s view,” the rating agency says.

Meanwhile, in order to provide financial assistance to the loss-making airlines, the ministry of finance in October this year, extended the loan amount eligibility for the domestic aviation aviation sector to ₹1,500 crore under the Emergency Credit Line Guarantee Scheme (ECLGS). The ECLGS has been extended till March 2023. 

“Ministry of Finance, has modified the Emergency Credit Line Guarantee Scheme (ECLGS) yesterday to enhance the maximum loan amount eligibility for airlines under ECLGS 3.0 to 100% of their fund based or non-fund-based loan outstanding as on the reference dates or Rs. 1,500 crore, whichever is lower and of the above, Rs. 500 crore shall be considered, based on equity contribution by the owners,” said the ministry in a statement.