For FY2023, domestic passenger traffic is estimated at ~1,361 lakh, a YoY growth of ~60%, and marginally lower by ~4% compared to FY2020 (pre-Covid levels).
For March 2023, domestic air passenger traffic has been estimated at ~130 lakh, ~8% higher than ~121 lakh in February 2023. However, it witnessed a YoY growth of ~22%, as March 2022 was marginally impacted by the Omicron variant of Covid-19. Domestic passenger traffic in March 2023 was higher by ~12% compared to the pre-Covid levels (i.e. March 2019).
The airlines’ capacity deployment in March 2023 was higher by ~14% than that of March 2022, while it was higher by ~7% than the pre-Covid levels (March 2019). For 11M FY2023, international passenger traffic for Indian carriers stood at ~216.0 lakh, there by almost matching the pre-Covid 11M FY2020 levels of ~217.8 lakh, although 9% lower than the peak levels of 238.0 lakh for 11M FY2019.
In ICRA’s view, capacity addition in FY2023 will be limited to around 10% of the FY2022 fleet of airlines, which is close to around ~700 aircraft. There are large aircraft purchase orders announced by various players in the industry. As per the indicative numbers, the total fleet deliveries pending are close to ~1,100, which is ~1.5x the fleet currently under operation. However, these will be delivered over the medium to long term and a large part of these will be towards replacement of old aircraft with new fuel-efficient ones. In addition, supply – chain challenges faced by aircraft manufacturers are also likely to constraint their production schedules, which is also reflected by grounding of certain proportion of the airlines’ fleet. ICRA believes that capacity additions for the industry will only be gradual.
While some airlines have adequate liquidity and/or financial support from a strong parent, which can help them sustain over the near term, for others, the credit metrics and liquidity profile will remain under stress over the near term, albeit better than over the past few years.
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