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ICRA revises aviation sector outlook to stable from negative

08 Mar 2023 Evaluate

Rating agency ICRA has revised the outlook for the country's aviation sector to stable from negative, citing fast-paced recovery in the domestic air passenger traffic. It also said that domestic passenger traffic growth is estimated at 8-13 per cent next fiscal (FY24), post the 55-60 per cent expansion in FY2023, to reach 145-150 million, which is much higher than the pre-Covid levels. It added that the industry's loss in the current financial year is projected to be Rs 11,000 crore to Rs 3,000 crore and reduce to Rs 5,000 to Rs 7,000 crore in the next fiscal.

According to the report, while noting that the trend of passenger traffic is expected to continue in FY24, the agency said the industry has also witnessed improved pricing power, as reflected in the healthier yields and thus the revenue per available seat kilometre-cost per available seat kilometre spread of the airlines. The same is expected to continue, given the sequential decline in aviation turbine fuel (ATF) prices from the peak of June 2022 and the anticipation of relatively stable foreign exchange rates.

The report further said international passenger traffic for Indian carriers is on a growth trajectory with the resumption of scheduled international operations since March 27, 2022, and was lower only by 2.4 per cent in the first nine months of this fiscal compared to pre-Covid levels. It also said the international passenger traffic for Indian carriers to witness a year-on-year growth of 10-15 per cent next fiscal after the 125-130 per cent expansion in FY23.

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