Air traffic to grow upto 340 million FY25; airlines revenue to grow 15-17%: ICRA

Domestic passenger air traffic is expected to grow steadily in the current fiscal year. After growing by 13% in the previous year, air passenger traffic in India is expected to grow 8-10% in FY2025, as per a latest estimate by ICRA.

While in FY24, some domestic air traffic surged to 307 million, this year the number may touch 340 million. Since the COVID-19 pandemic rattled the aviation industry, the market in India has bounced back sharply. From 105 million domestic passenger traffic in FY21, it jumped to 167 million in the following year - growing 59% year-on-year. In FY23, it further grew 62% to 270 million. 

In fact, the recovery in the number of passenger traffic in India post-pandemic has been better than most economies. In India, while the number of overall passenger traffic in 2023 was 6% higher than the 2019 levels. In leading economies and/or regions like Europe and China, the 2023 numbers are 5.3% and 6.1% lower than 2019 levels, respectively.

While in the USA, the passage traffic numbers are just at 2019 levels, in Canada & Australia, its 8.6% and 8.5% lower, respectively.

International air traffic that regained the pre-pandemic levels in FY24, is expected to further grow by 10-14% in the current fiscal year. Last year, international passenger traffic stood at 70 million - slightly over the previous high of 69 million in FY19. In FY25, the figure is expected to reach 77-80 million levels.

With passenger traffic growing at a healthy pace, operating revenue for the civil aviation industry is set to rise handsomely. According to ICRA’s estimates, in FY25 operating revenue to grow 15-17% over the previous year. And the trend is expected to continue in FY26 as well. In FY24, operating revenue had grown by 17% year-on-year.

“With sustained improvement in both domestic and international passenger traffic, rise in tariffs at some of the major airports and ramp-up of non-aeronautical revenues, the revenues for ICRA’s sample set are likely to grow by around 15-17% YoY in FY2025. Despite expectation of
improved profitability, coverage metrics may moderate on account of higher interest outgo with commercialisation of capex at key airports,” it noted.