Tag Archives: Indian aviation industry

Indian aviation industry is set to scale new heights. According to a recent report by ICRA, the domestic air passenger traffic is estimated at 154 million for FY2024, which represents a YoY growth of 13%, in line with ICRA’s estimates. Further, the domestic air passenger traffic in FY2024 has surpassed the pre-Covid levels of 142 million in FY2020 as well.

Jyoti Mayal, President, TAAI, highlighted, “The increase in the number of flights and routes will automatically reduce the airfares. It is always a demand-supply story. If the demand for flights is too much and the supply is less then fares will be at peak, but if it balances out, fares will come down on their own. Probably, the domestic market will keep on moving in the current scenario, but high fares can affect our inbound numbers. An international traveller in India compares it with other countries, which are cheaper than India at times. This is going to impact the international arrivals to India.”

According to the latest update by CAPA on the state of the Indian aviation industry, Indian carriers will require a domestic fleet of around 300-325 aircraft from Oct-2020 onwards, and an international fleet of 100-125 aircraft. The total fleet size of 400-450 aircraft would still mean that the current fleet of 650 represents a surplus of 200-250 aircraft for a period of 6-12 months. While a gradual path towards normality could be expected during Q3 and Q4, the Indian aviation sector is likely to shrink significantly, even if some of the vulnerable airlines manage to survive. This estimate may still be conservative and assumes that Q1 FY2021 will be almost written-off, with traffic limping back during the weak second quarter, followed by a gradual trajectory towards normality during the second half of the financial year.

According to ICRA estimates, considering the operating expenses of the Indian aviation industry in FY2019 and that 35-42 per cent of their expenses are fixed in nature, it is estimated that the industry will report a net loss of Rs 75-90 crore per day of shutdown of operations. While some airlines have sufficient liquidity and/or financial support from a strong parentage, which will help them tide over this disruption, some airlines, who are already in financial stress, will face serious troubles.