Domestic airlines have been increasing yields, but the same has not been adequate to offset the impact of the rising ATF prices, according to ICRA. However, a quick recovery in domestic passenger traffic is expected in FY23, helped by normalcy in operations and the waning pandemic. “The earnings recovery for domestic airlines, however, will be slow-paced due to elevated ATF prices in addition to the rupee depreciation against the US$ amid a heightened competitive environment,” ICRA said in its report. The ratings agency continues to maintain a negative outlook on the industry as the financial performance of Indian air carriers is likely to remain under pressure in the near term, even as recovery in domestic passenger traffic has been healthy.
