International passenger traffic rises 8 per cent month-on-month in August, but domestic traffic falls 11 per cent as high fuel costs and a weaker rupee squeeze airlines, says Equirus.
India’s aviation sector could see a gradual recovery in international demand in the coming months, even as domestic passenger traffic remains under pressure, according to brokerage firm Equirus.
International passenger traffic of Indian carriers rose 8 per cent month-on-month to around 2.6 million in August, while international revenue passenger kilometres (RPKs) increased 9 per cent. Demand growth outpaced capacity expansion, pushing the international passenger load factor (PLF) up 106 basis points to around 77.2 per cent.
Despite the sequential improvement, international traffic remained 13 per cent below year-ago levels, indicating that the recovery is still in its early stages.
Domestic aviation demand remains under pressure
Domestic passenger traffic declined 5 per cent year-on-year and 11 per cent month-on-month to around 12 million passengers in August. Domestic RPKs fell 5 per cent year-on-year and 12 per cent month-on-month.
Airlines also reduced capacity, with available seat kilometres (ASKs) declining 9 per cent sequentially and flight departures falling 8 per cent year-on-year.
As demand declined slightly faster than capacity, domestic PLF moderated by 256 basis points month-on-month to around 83.1 per cent. However, it remained 27 basis points higher than a year earlier.
More from BusinessFuel costs, weak rupee add to airline pressure
Cost pressures remain a key challenge for the aviation industry. Brent crude stood at around $90.1 per barrel in August, up 32 per cent year-on-year, while Singapore jet fuel prices surged 83 per cent year-on-year to around $154.7 per barrel.
The rupee’s depreciation to around Rs 95.7 per US dollar has added further pressure on airlines, particularly on dollar-denominated expenses such as aircraft leases and maintenance.
International passenger traffic rises 8 per cent month-on-month in August, but domestic traffic falls 11 per cent as high fuel costs and a weaker rupee squeeze airlines, says Equirus.
The competitive landscape also continued to evolve. IndiGo’s domestic market share rose to around 67.2 per cent, up 212 basis points year-on-year, while the Air India Group’s domestic share stood at around 24.2 per cent, down 220 basis points year-on-year.
Equirus, however, cautioned against interpreting monthly market-share movements as evidence of a structural competitive shift.
On the international front, Air India Group’s share rose to 43.2 per cent sequentially, while Akasa Air’s international share increased to 4.2 per cent.
According to Equirus, the contrasting domestic and international trends point to a near-term realignment of capacity among Indian carriers. IndiGo remains relatively more focused on the domestic market, while Akasa Air is increasingly deploying capacity internationally.
The brokerage said the changing capacity mix, combined with improving international demand, could shape competitive dynamics in India’s aviation sector in the coming months.
