Domestic air passenger traffic increased by 19% in February – ICRA

Domestic air passenger traffic recorded a growth of 19% month-on-month in February at 76 lakh aided by a decline in Omicron wave, research and rating agency ICRA said in a report.

However, on a year-on-year basis, the traffic was down 2.6% during the month. While the decline in the Covid wave is aiding the rise in passenger traffic, with daily passenger traffic at about 334,000 currently, the rise in aviation turbine fuel price remains the major headwind for airlines.

Domestic air passenger traffic increased by 19% in February

The ongoing armed conflict between Russia and Ukraine has led to a rise in crude oil prices, with Brent crude oil hovering around USD 127 per barrel.

“One major concern that continues to be a drag on the aviation sector is the aviation turbine fuel (ATF) prices, which have seen a sharp increase of about 57% on a Y-o-Y (year-on-year) basis till March 2022. It is mainly attributed to increasing in crude oil prices.

This, coupled with relatively low-capacity utilisation of aircraft fleet, will continue to weigh on the financial performance of Indian carriers in FY22.”

Suprio Banerjee, Vice President and Sector Head, ICRA

ALSO READ – Domestic aviation industry expected to report a net loss of INR 26,000 crore this fiscal

In an earlier report, the agency had outlined that domestic air passenger traffic is estimated to record year-on-year growth of 50-55% in 2021-22 (Apr-Mar), but high fuel prices and fare caps would dent the profitability of airlines, with the industry expected to record a loss of INR 25,000-26,000 crore during the current fiscal.

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