Indian Credit Rating Agency (ICRA), the domestic rating agency in its latest report has said that the Indian Aviation Industry is likely to report 22 to 23 percent passenger traffic growth in FY17 supported by ongoing low airfare regime. It also said that the airlines are maintaining healthy passenger load factors (PLFs) backed by low airfares. Though, since the aviation turbine fuel (ATF) prices have been on an uptrend during the year, the impact on profitability of the airlines during Q4 FY17 is inevitable, as average ATF prices during the quarter are 37.9 percent higher YoY, while the yields continue to remain under pressure.
ICRA said that the Indian Aviation industry has reported YoY passenger traffic growth of 23.2 percent during 10m FY17 period and the industry is heading towards completing one of the best years in terms of passenger traffic growth. It also said that the domestic passenger growth for last five years stood at 12.9 percent, 5.3 percent, 4.6 percent, 15.5 percent and 22.1 percent and the industry is likely to surpass the last year growth rate, notably on a higher base. According to the report, during the month of January 2017, the domestic passenger traffic growth stood at 25.3 percent. The YoY traffic growth on international routes for the industry was moderate at 8.8 percent; however, the Indian carriers outperformed the industry growth, with 17.8 percent YoY growth in traffic.
As per its estimation, the fuel cost per ASKM (CASK) of the domestic aviation industry increased to Rs 1.16 in January 2017 from a low of Rs 0.82 in February 2016, and the same is expected to increase further in February and March 2017. Further, outstanding order backlog of various Indian airlines underlines healthy future capacity addition. Backed by competitive pricing, the industry reported stellar PLF of 84.4 percent during 10m FY17, which is also one of the best amongst the key markets in the world.
