Aviation sector to maintain fast-paced recovery through H2 FY24: Icra

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₹121,013 per kl in 2022-2023 and at ₹101,833 per kl so far in the current financial year compared with an average of ₹65,368 per kl in 2019-2020. Jet fuel prices in Delhi rose for a fourth consecutive month to reach ₹118,199.17 per kilolitre (kl) on 1 October, a 32% spike since June.

In fact, Indian airlines have started imposing fuel surcharge on airfares to compensate for the rise in fuel prices. The largest carrier IndiGo with 63% market share has announced a ₹300-1,000 fuel surcharge and fellow low-cost carrier SpiceJet has also confirmed that it will also impose a component of fuel surcharge.

“While domestic airlines have a partial natural hedge to the extent of earnings from their international operations, overall, their net payables are in foreign currency. The airlines’ efforts to ensure fare hikes, proportionate to their input cost increases, will be the key to expand their profitability margins," Icra added.

Icra maintained that it estimates the Indian airlines to reduce their losses to ₹30-50 billion in 2023-2024 (Apr-Mar) on back of steady growth in passenger traffic, pricing discipline and consolidation in the industry. As per Icra, the industry is estimated to have reported a net loss of nearly ₹170-175 billion in 2022-2023 and a net loss of nearly ₹217 billion in 2021-2022.