The ICRA said the rise in aviation turbine fuel prices is developing into a major threat to the recovery process due to the ongoing geopolitical issues related to the Russia-Ukraine conflict.
The ICRA said the rise in aviation turbine fuel prices is developing into a major threat to the recovery process due to the ongoing geopolitical issues related to the Russia-Ukraine conflict.
“Domestic air passenger traffic is estimated to grow 83% year-on-year (YoY) to 10.5 million in April, as the cases of COVID-19 infection reduced, of only 5% compared to pre-pandemic gap left. level,” ICRA (formerly Investment Information and Credit Rating Agency of India Limited) had said on May 9. The Indian carrier carried around 11 million passengers in April 2019.
“Although domestic airline operators saw international passenger traffic surpassing the pre-pandemic numbers (about 1.83 million), the total volume was around 1.85 million,” it said.
It also said that aviation turbine fuel (ATF) prices are rising due to rising geopolitical issues. Russia-Ukraine conflict continues to develop into a major threat to the recovery process.
For April 2022, the average daily departure was around 2,726, notably higher than the average daily departure of around 2,000 in the same month a year ago and compared to around 2,588 in March 2022, Vice President and Sector Head Supriyo Banerjee said. , Icra.
According to him, the average number of passengers per flight during the last month of April was 128, as compared to 133 passengers per flight in March 2022 and lower than the average of 135 passengers per flight in April 2019.
“While the recovery in passenger traffic in FY2023 is expected to be at a relatively faster pace, given the normalcy seen in domestic airline operations, any further COVID wave looms over the sector,” Mr Banerjee he said.
“Increased ATF prices due to geopolitical issues will remain a near-term challenge for the industry and will continue to impact the profitability of Indian carriers,” he added.
“In view of the increase in crude oil prices due to geopolitical issues arising out of Russian invasion of Ukraine, ATF prices have increased by about 89% year-on-year in the current month,” ICRA said.
“Rising ATF prices will pose a serious threat to the earnings of the industry in FY2023, it said, adding that overall, a return to normalcy will lead to an improvement in passenger load factors, which in turn will aid revenues. However, the increased ATF prices will continue to impact earnings of Indian carriers in FY2023,” it said.