Mint Explainer: Why Indian aviation expects a historic Q3
Mint explains why insiders expect the current quarter to be historic. India’s air passenger traffic has more than doubled since 2013. Domestic air passenger traffic for April-September 2023 saw a 142% jump to 112.9 million passengers from 46.6 million during the same period in 2013.
Until 2022 the highest monthly air traffic in the history of Indian aviation was recorded in December 2019, with 13.02 million passengers. This record was broken in May 2023, when a record 13.2 million passengers were recorded. The strong demand momentum compared to pre-covid levels is even visible in the weak travel periods of Jan-Mar and Jul-Sep.
Data from Directorate General of Civil Aviation shows that in every month since January, air travel was higher than the corresponding pre-pandemic period by an average of nearly 8%. In fact, domestic air traffic has also not been affected by the grounding of major airlines (such as Go First in May 2023 and Jet Airways in April 2019) despite a surge in air fares due to these incidents. This year has also seen airfares nearly 30-40% dearer as compared to last year on account of capacity constraints following global supply-chain issues and high prices of aviation turbine fuel.
Still, airlines have been able to maintain higher prices without affecting demand too much. "The industry has witnessed improved pricing power, reflected in the improved yields and thus the revenue-per-available-seat-kilometre to cost-per-available-seat-kilometre (RASK-CASK) spread of the airlines," ratings agency ICRA said in a report. The strong demand momentum for air travel coupled with onset of the festival seasons in India is expected to result in record levels of air traffic and “very healthy" top lines and bottom lines
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