Domestic air travel registered 59 pc YoY growth in FY22: ICRA

New Delhi, April 11 : Domestic air travel registered 59 per cent YoY growth in FY2022, rating agency IRCA said on Monday. However, it said the growth was lower by 40 percent from pre-Covid levels. The rating agency said rising ATF prices was a concern. For FY2022, domestic passenger traffic is estimated at 84 million, marginally higher than ICRA’s estimates of 80-82 million. 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, it said. Near to normalcy in airline operations due to the waning impact of the pandemic resulted in a sequential growth of 37 per cent in domestic air passenger traffic to 106 lakh in March 2022 compared to 77 lakh in February 2022, and YoY growth of 35 per cent compared to 78 lakh in March 2021, the agency said. The airlines’ capacity deployment for March 2022 was 12 per cent 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 per cent, 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. Suprio Banerjee, Vice President and Sector Head, ICRA said, “Domestic passenger traffic for FY2022 is estimated at 84 million, YoY growth of 59 percent , marginally higher than our estimate of 80-82 million, although it is 40 percent 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,” he said. One major positive development was resumption of scheduled international operations from March 27, 2022, post its suspension for almost two years. While the scheduled international operations were suspended till March 27, 2022, the Ministry of Civil Aviation (MoCA) had permitted international operations under the Vande Bharat Mission (VBM) and the Air Transport Bubbles (ATB). Under the VBM for evacuation of Indian citizens from foreign countries, which started from May 7, 2020, the international passenger traffic (inbound and outbound) for Indian carriers has been pegged at 81.44 lakh for the period May 7, 2020, to March 26, 2022. For March 2022, international passenger traffic for Indian carriers under the VBM was recorded at ~6.01 lakh, a sequential growth of 9 per cent. The ATF prices surged by 93 per cent on a YoY basis in April 2022, given the elevated crude oil prices, due to the geo-political issues arising from 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,” the agency said. 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, it added. AKM SY 1456

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