International aviation recovery gathers pace as West Asia tensions ease; domestic demand remains resilient: Report
New Delhi, July 4
International Air travel by Indian carriers is showing signs of recovery as geopolitical tensions in West Asia ease, while domestic passenger demand remains resilient despite continued capacity additions, creating a more favourable operating environment for airlines, according to an Equirus Securities aviation sector report.
The report said easing tensions in West Asia have helped airlines gradually restore international operations, while lower global aviation fuel prices have provided some relief on costs.
"Easing geopolitical tensions in West Asia facilitated a gradual normalization of international flight operations, supporting a recovery in international traffic," the report said.
International passenger traffic carried by Indian airlines rose to around 2.3 million in May, up 24 per cent from the previous month. Flight departures increased 22 per cent sequentially, while passenger load factor (PLF) improved to 76.6 per cent, indicating that demand recovered faster than capacity additions during the month.
The report also highlighted that the domestic market remained robust, with passenger demand continuing to outpace capacity growth.
"Strong demand absorption outpaced capacity growth, resulting in PLF improving to ~85.9 per cent... highlighting healthier aircraft utilization," the report said.
Domestic passenger traffic increased to about 15.4 million in May, up 10 per cent year-on-year and 11 per cent month-on-month, while flight departures rose 5 per cent from a year earlier. Capacity, measured by available seat kilometres (ASKs), increased 8 per cent year-on-year, suggesting airlines were able to fill additional seats despite expanding networks.
On the cost front, the report said airlines received some relief as global fuel prices corrected sharply during the month. Brent crude averaged around USD 72.9 per barrel, down 21 per cent month-on-month, while Singapore jet fuel prices declined 12 per cent sequentially.
However, it cautioned that the weak rupee continued to put pressure on airline finances.
"The INR remained weak at ~94.7/USD... continuing to exert pressure on dollar-denominated expenses such as aircraft leases, maintenance and other operating costs despite a modest sequential improvement," the report said.
The report also pointed to changing competitive dynamics in the industry. IndiGo retained its leadership in the domestic market with a passenger market share of 64.8 per cent, while the Air India Group's share improved sequentially to 25.7 per cent. Akasa Air continued to gradually expand its domestic presence.
In the international market, IndiGo strengthened its position further.
"IndiGo's international passenger market share increased to ~52.5 per cent... reflecting faster normalization of its international network and capacity deployment," the report said, adding that Air India Group's share moderated during the month.
The report also noted that IndiGo continued to lead the industry in operational performance, recording an on-time performance (OTP) of 88.5 per cent in April, while Air India Group improved its OTP to 82.4 per cent, reflecting better operational execution.
— ANI
Reader Comments
As someone who flies domestically every month for work, it's reassuring to see PLF at 85.9% - shows airlines are actually filling seats properly now. But honestly, the ticket prices haven't come down much despite lower fuel costs. Hope some of those savings trickle down to consumers! Also, IndiGo dominating at 64.8% market share... is that healthy for competition? 🤔
Interesting data from the report. The international recovery is certainly welcome after the Israel-Hamas tensions disrupted routes. But let's not ignore the elephant in the room - fuel costs might have eased temporarily, but with OPEC+ dynamics and a weakening INR, that relief could be short-lived. Indian carriers need to focus on fleet modernization and cost hedging to sustain this momentum.
Domestic demand being resilient is the real story here. 15.4 million passengers in a single month is massive! But I worry about airport infrastructure keeping up - Delhi, Mumbai, Bengaluru are already bursting at the seams. Also, IndiGo's OTP of 88.5% is impressive, but the Air India Group improving to 82.4% shows the merger is paying off operationally. Hope we see better service standards across the board now. 🇮🇳
The 24% month-on-month jump in international traffic is remarkable. But I'm curious - are Indian carriers really capturing this growth, or are foreign airlines eating into market share? The report mentions IndiGo's international share at 52.5%, which is strong, but I'd love to see data on how Indian carriers stack up against Emirates, Qatar, and others on long-haul routes. The battle for market share is only going to intensify. 📊
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