New Delhi, November 7, 2024 – The Indian aviation industry is undergoing significant changes, with contrasting trends seen across different sectors. Recent reports reveal vibrant growth in domestic air passenger traffic, even as challenges loom for some airlines.
Data released indicates domestic air passenger numbers soared to 138.5 lakh (13.85 million) for October 2024, logging a 6.3 percent increase from 130.3 lakh (13.03 million) the prior month. Year-on-year comparisons reveal an impressive 9.6 percent growth over the same month last year, and the numbers are markedly above pre-COVID figures, registering a 12.8 percent rise from 122.8 lakh (12.28 million) recorded in October 2019. This growth reflects the increasing confidence of travelers returning to the skies.
For the first half of the current fiscal year (April to October), the cumulative domestic air passenger traffic totaled around 932.0 lakh (93.2 million), showcasing reliable year-on-year growth of 5.9 percent. Meanwhile, international passenger traffic for Indian carriers reached 162.6 lakh (16.26 million) during this same period, which was up by 16 percent from the previous year.
The airlines ramped up capacity deployment as well, increasing it by 7.6 percent compared to October 2023, and by 5.2 percent compared to September 2024. Despite these positive numbers, the broader financial outlook remains cautious. The Indian aviation industry is expected to face net losses between Rs 20 to 30 billion for FY2025 and FY2026, significantly up from Rs 10 billion for FY2024. These projections are largely attributed to heightened operating costs due to elevated aviation turbine fuel (ATF) prices.
Echoing this sentiment, the report from ICRA indicates the industry could see gradual recovery, citing the high fixed cost nature of the business as a major hurdle for quicker financial recuperation.
ACross the industry, significant operational issues have been identified, particularly related to engine performance. Various airlines have been grappling with supply chain problems, particularly failures linked to Pratt and Whitney (P&W) engines. This technical hiccup has led to grounded fleets at airlines like Go Airlines (India) Limited, which had to ground nearly half of its operations, and InterGlobe Aviation Limited (IndiGo), with more than 70 aircraft reportedly affected due to engine issues, including contamination factors associated with the powder metal used for engine components.
Information highlights indicate the grounded aircraft accounted for approximately 15-17 percent of the total industry fleet. This situation is undeniably impacting the total capacity of the airlines, as measured by available seat kilometers (ASKMs).
Meanwhile, on the business front, Tata Consultancy Services (TCS) announced its commitment to helping Air France-KLM achieve its vision of becoming the leading data-driven airline globally. TCS has secured a multi-year partnership with the airline group, which involves transitioning its data management to the cloud over the next three years. This shift aims to modernize operations, improve decision-making, and boost operational efficiency.
During the signing of the deal, Pierre-Olivier Bandet, the EVP and Group CIO for Air France-KLM, noted the enduring partnership with TCS spans three decades, underlining the trust and confidence placed by Air France-KLM on TCS's capabilities.
This new data architecture is envisioned to streamline operations covering various aspects, including flight operations, passenger management, aircraft maintenance, and e-commerce, creating pathways toward enhanced reliability and customer service. TCS’s commitment involves mobilizing over 100 professionals across its delivery centers located around the globe, signifying the scale and seriousness of the endeavor.
Yet, amid these positive partnerships and rising passenger numbers, the cloud of uncertainty looms over Jet Airways. The Supreme Court order mandatorily liquidated the once-vibrant airline, leaving approximately 1.48 lakh (148,000) retail shareholders shell-shocked as they hold nearly 20 percent of the beleaguered airline's stakes. The situation is dire as retail shareholders’ assets reportedly funnel down to approximately Rs 74.6 crore (about $9 million) at the current market capitalization of Rs 386.69 crore (approximately $47 million).
The bench, led by Chief Justice DY Chandrachud, upheld the lenders' plea to deny the transfer of ownership to the Jalan Kalrock Consortium, yielding devastating consequences for the airline's future and its investors—200 crore infused by the consortium was ordered forfeited, and Rs 150 crore Performance Bank Guarantee was set for invocation.
With Air France-KLM venturing confidently forward and Indian domestic air travel setting records, Jet Airways’s fallout reflects the dichotomy within the aviation sector. Challenges remain, but there is undeniable momentum behind India’s aviation aspirations, ensuring the skies will likely stay busy as travelers return and businesses seek growth.
