Aviation take-off could have air pockets

With the end of 2023 fast approaching, we can look back on a year of strong recovery in demand as passengers took full advantage of their freedom to travel. There is every reason to believe that this momentum can be maintained in the New Year, despite economic and political uncertainties in parts of the world. But we need the whole value chain to be ready. Supply chain issues in the aircraft manufacturing sector are unacceptable. They have held back the recovery and solutions must be found. The same holds true for infrastructure providers, particularly air navigation service providers. Equipment failures, staffing shortages and labour unrest made it impossible to deliver the flying experience our customers expect. A successful 2024 needs the whole value chain to be fully prepared to handle the demand that is coming. These were the pearls of wisdom showered by Willie Walsh, IATA’s Director General. Given the fast-paced recovery of air passenger traffic in FY23 and continuation of the same in the current fiscal, coupled with improved pricing power, the RASK-CASK spread of some Indian airlines turned positive since Q3 FY23. The industry is estimated to report a significantly lower net loss of about Rs. 30-50 billion in FY2024 compared to a projected Rs. 170-175 billion in FY2023, said Suprio Banerjee, Vice-president, Corporate Ratings.

India's air traffic is expected to rise about 15 per cent to 155 million passengers in 2023-24, despite the grounding of Go First, according to aviation advisory and research firm CAPA India. "Currently, Indian carriers have around 150+ aircraft on the ground, largely due to supply chain and other issues," a report said. This could cross 200 aircraft by the end of March 2024. Further, India's international air traffic has also maintained growth in line with CAPA's guidance and is expected to end the year at around 70 million passengers. Overall industry profitability is expected to be largely in line with CAPA's initial guidance of a loss of $1.648 billion, of which full-service carriers are expected to account for $1.4-1.5 billion and low-cost carriers for $200-300 million. As per the report, despite having a very challenging FY2024 from an operational perspective due to the Pratt & Whitney engine issues, IndiGo could post a record profit of $500 million and will see its cash balances increase by $1.2+ billion.

The Air India Group would have added over 60 aircraft by the end of this financial year, including 30 for Air India, 20 for Air India Express and 10+ for Vistara, by which time the total fleet will reach close to 300 aircraft. The airline continues to expand rapidly, as it seeks to make up for lost time. Further, the advisory firm, in its latest outlook, said India's operational fleet remains severely constrained. By the end of this year, out of a projected 789 aircraft on the register, only 588 are expected to be operational, the report said, while adding that airlines such as IndiGo and SpiceJet have resorted to inducting aircraft on wet lease to bridge the shortfall in capacity. Up to 30 wet-leased aircraft are expected to be operating in India by March 2024.