Rising aviation turbine fuel (ATF) prices due to ongoing geopolitical issues linked to the Russia-Ukraine conflict continue to evolve as a major threat to the recovery process.
Highlights
- Domestic air passenger traffic is estimated to have logged an 83 percent growth
- Indian carriers had flown around 11 million passengers in April 2019
- For April 2022, the average daily departures were at around 2,726, notably higher than last year
Domestic air passenger traffic is estimated to have logged an 83 percent growth year-on-year at 10.5-million in April as Covid-19 infection cases waned, leaving a gap of just 5 percent when compared to the pre-pandemic level, ICRA said on Monday.
Indian carriers had flown around 11 million passengers in April 2019. However, the domestic airline operators saw the international passenger traffic marginally surpassing the pre-pandemic numbers (around 1.83 million), with total volumes standing at around 1.85 million, it said. It also said that rising aviation turbine fuel (ATF) prices due to ongoing geopolitical issues linked to the Russia-Ukraine conflict continue to evolve as a major threat to the recovery process.
For April 2022, the average daily departures were at around 2,726, notably higher than the average daily departures of around 2,000 in the same month a year earlier and higher compared to around 2,588 in March 2022, said Suprio Banerjee, Vice-President & Sector Head, ICRA. According to him, the average number of passengers per flight during the previous month of April was 128, against that of 133 passengers per flight in March 2022 and lower than the average of 135 passengers per flight in April 2019.
“Though recovery in passenger traffic is expected to be relatively fast-paced in FY2023, given the near normalcy situation seen in domestic airline operations, overhang of any further Covid wave looms on the sector,” added Banerjee. Elevated ATF prices aggravated by geo-political issues will remain a near term-challenge for the industry and will continue to weigh on the profitability of Indian carriers, he stated.
ATF prices have surged by around 89 percent on y-o-y in the current month given the elevated crude oil prices, due to geopolitical issues arising from the Russian invasion of Ukraine, ICRA said. The rising ATF prices will pose a serious threat to the industry earnings in FY2023, it said, adding, on an aggregate basis, a return to normalcy will lead to recovery in passenger load factors, which in turn will aid revenues. However, elevated ATF prices will continue to weigh on the earnings of Indian carriers in FY2023, it said.
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