International air traffic likely to reach 85% of pre-Covid levels in FY23

International traffic is expected to reach 80%-85% of pre-Covid levels in FY23 compared to 33% in FY22, thanks to the healthy ramp-up in passenger traffic, ratings agency ICRA says in its latest report.

The recovery in domestic passenger traffic, too, was a strong post-dip in traffic due to Covid variant Omicron. "The domestic passenger traffic increased by 59% YoY and reached 61% of pre-pandemic level (FY20 domestic traffic) in FY22. The recovery in domestic traffic continues in FY2023 and has reached 98% of pre-Covid levels (similar period in 2019) in April and May 2022," says the report. The recovery trend in traffic was supported by the easing of travel restrictions norms and resilient passenger demand.

The aircraft traffic increased by 47% YoY in FY22 on a low base in FY2021. Supported by strong passenger traffic, the aircraft traffic reached 97% of pre-Covid levels (May 2019) in May 2022 and ICRA expects 45-47% YoY growth in aircraft traffic during FY2023. "In FY23, the overall passenger traffic is expected to ramp up to 96-97% of the pre-Covid levels on the back of the strong and sharp recovery in domestic passenger traffic and the resumption of international commercial operations," says the ratings agency.

However, ICRA continues to have a "negative outlook" on the Indian airport infrastructure industry, reflecting its view that the financial performance of Indian airlines is likely to remain under pressure in the near term.

International commercial operations had resumed on March 27, 2022, after a two-year ban. The ramp-up is healthy, with international passenger traffic reaching 63% and 72% of pre-Covid level (similar period in 2019) in April and May 2022, respectively.

The total cargo volumes increased by 2.4% YoY to 269.2 thousand tonnes in April 2022 and reached 98% of the pre-Covid levels (April 2019) in April 2022. The cargo volumes are expected to increase by 9%-10% YoY growth and cross pre-Covid levels in FY23.

Escalating aviation turbine fuel (ATF) prices continue to pose a major threat to the profitability of the airlines in the near term. However, ATF prices have fallen 1.3% to ₹121,475.74 per kilolitre (Kl) in Delhi from June 1. The ATF prices in Kolkata, Mumbai and Chennai stand at ₹126,369.98 per kl, ₹120,306.99 per kl, ₹125,725.36 per kl, respectively. Overall, ATF prices make up 40% of the total running cost of an airline.

Passengers carried by domestic airlines from Jan-April 2022 were 3,56,80,000 against 2,91,08,000 during the corresponding period of the previous year, registering an annual growth of 22.58% and monthly growth of 90.05%. In March, IndiGo carried a maximum of 64.11 lakh passengers, retaining the highest market share at 58.9%, followed by GoFirst at 11.09 lakh passengers (10.2% market share) and SpiceJet at 10.01 lakh passengers (9.2% market share). For the January-March quarter, IndiGo's market share stood at 53.9%, followed by SpiceJet at 10.2% and Air India at 9.9%.