“Rising ATF prices continue to play a spoilsport for the industry and pose a serious threat to the sector’s earnings in FY23.”
“Rising ATF prices continue to play a spoilsport for the industry and pose a serious threat to the sector’s earnings in FY23.”
India’s domestic passenger traffic is estimated to have grown about 59% year-on-year to 84 million in FY22, although it’s still about 40% lower compared to pre-pandemic levels, ratings agency Icra said on Monday.
Elevated jet fuel (ATF) prices, exacerbated by geopolitical issues, are also expected to remain a short-term challenge for the industry and will be a key driver of sector profitability. On a sequential basis, domestic passenger traffic rose about 37% to 10.6 million in March, reflecting near-normal flight operations as the impact of the pandemic eases, Icra said.
Passenger traffic on local air routes was 7.7 million in February 2022, he added. Traffic growth in March this year was 35%, compared with more than 7.8 million in the same month last year, it said. Airline capacity provision for March 2022 saw a 12% growth to 80,217 departures compared to more than 71,548 departures in the same month last year, Icra said.
Domestic departures in March this year saw a 42% month-on-month growth, driven by the increased pace of vaccination and the rapid weakening of the third wave of COVID-19, allowing travel restrictions to be lifted quickly, the ratings agency said.
“Domestic passenger traffic for FY2022 is estimated at approximately 84 million, a growth of 595 year-on-year, slightly higher than our estimate of 80-82 million, although approximately 40% below pre-COVID levels,” Vice President and Sector Head of Icra said Suprio Banerjee.
In March of this year, average daily departures were about 2,588, higher than average daily departures of about 2,308 in March 2021 and significantly higher compared to about 2,023 in February 2022, he said.
The average number of passengers per flight was 132 in March this year, compared to an average of 135 passengers per flight in February, Mr Banerjee said.
According to Icra, a key positive development is the resumption of planned international operations from March 27 after a hiatus of nearly two years. ATF prices rose about 93% year-on-year in April this year amid higher crude oil prices and geopolitical issues stemming from the Russo-Ukrainian war, the rating agency said.
Soaring ATF prices continue to be a spoilsport for the industry and will seriously jeopardize the sector’s profits in FY23, it said.
