India's aviation sector sees international traffic recovery as domestic demand remains strong: Report

India’s aviation sector saw a gradual recovery in international traffic in May over easing geopolitical tensions in West Asia and continued to witness strong domestic demand, a report said on Saturday.

Easing geopolitical tensions facilitate gradual normalisation of international flight operations, while lower fuel costs support airlines despite continued pressure from a weak rupee on aircraft leases, maintenance and other dollar-denominated operating expenses, the report from Equirus Securities said.

International passenger traffic carried by Indian airlines recovered sequentially to around 2.3 million, increasing 24 per cent month-on-month, while revenue passenger kilometres (RPKs) rose to around 8 billion, up 12 per cent sequentially.

Flight departures improved to about 14,200, up 22 per cent monthly, while available seat kilometres rose 10 per cent month‑on‑month to around 10.5 billion, the report added.

Passenger demand outpaced capacity recovery sequentially, resulting in passenger load factor improving to 76.6 per cent, indicating a gradual normalisation of international operations.

The report said global aviation fuel prices corrected meaningfully on a sequential basis, providing relief on fuel costs. Brent crude averaged around $72.9 per barrel, rising 8 per cent year-on-year but declining 21 per cent month-on-month.

However, the Indian rupee remained weak at around 94.7 against the US dollar, up 10 per cent year-on-year, continuing to exert pressure on dollar-denominated aircraft-related expenses.

On the domestic front, passenger traffic increased to around 15.4 million, registering growth of 10 per cent year-on-year and 11 per cent month-on-month, while RPKs rose to around 15.3 billion, also increasing 11 per cent on both an annual and sequential basis.

Capacity additions remained healthy, with Available Seat Kilometres (ASKs) increasing to around 17.8 billion, up 8 per cent year-on-year and 6 per cent month-on-month, while flight departures rose to around 103,500, increasing 5 per cent year-on-year and 6 per cent sequentially, said the report.

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