India June air traffic tops pre-covid level but capacity deployed falls 5%: Icra

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Icra said, indicating continued revival of the Indian aviation market. While domestic air traffic in June was around 5% lower sequentially, it witnessed a year-on-year growth of 19%.

This has taken the growth in domestic air passenger traffic in the June quarter of 2023-24 to 38.6 million, 19% higher on year and 10% higher than pre-covid levels. Airlines, however, have not been able to deploy higher capacity than pre-covid levels, partly due to supply chain issues and also due to the void left by the suspension of Go First in May.

Airlines’ capacity deployment in June was higher by a meagre 1% on year and was down 4.8% from pre-covid levels of June 2019.  Icra has maintained a stable outlook on the Indian aviation industry on the back of the fast-paced recovery in domestic passenger traffic in 2022-23 and expectations of the trend continuing in 2023-24. The mismatch between demand and capacity led to expensive air fares during the June quarter.

In fact, the passenger load factor, or capacity utilization, for Indian airlines stood at nearly 93% in June, up from approximately 79% in June 2022 and around 89% in June 2019 (pre-Covid levels). Airlines also witnessed improved pricing power, reflected in improved yields and also visible in the revenue per available seat km – cost per available seat km (RASK-CASK) spread of the airlines, said Suprio Banerjee, vice president & sector head - Corporate Ratings, Icra.

“The same is expected to continue as the industry regains some pricing discipline, coupled with the sequential decline in aviation turbine fuel prices as witnessed over the last five months and the relatively stable foreign exchange rates," Banerjee said. While jet fuel prices have witnessed a sequential decline over