Up, up and away: the implications of India’s soaring demand for air travel
₹1,00,893.63 per kl in Delhi, 3% higher on-year and 54% higher than in FY20. A strong and sustained demand is expected to result in tailwinds for Indian airlines.
As per ratings agency Icra, the pace of recovery is likely to be gradual due to the high fixed-costs. The industry reported a net loss of ₹17,000-17,500 crore in FY2023 but this is expected to narrow to ₹3,000-4,000 crore in FY24 and FY25, as airlines continue to witness healthy passenger traffic growth and maintain price discipline, Icra said.
However, airlines’ ability to raise profit margins proportionate to their input costs will be crucial. A shortage of capacity, resulting in higher air fares, can hurt demand.
However, airlines are resorting to inducting aircraft on lease in order to prevent this situation. For example, IndiGo, India’s largest airline with over 60% market share, has more than 70 of its fleet of 360 aircraft grounded.
It is expected to induct nearly 20 aircraft on lease from April to make up for this shortage in capacity. Similarly, Tata Group-backed Air India will also induct 20 leased Airbus A320neo aircraft by August of this year.
. Read more on livemint.com
