Chennai: The Indian aviation industry has an order book of 1,700 aircraft, which is more than double the size of the current fleet.
At present, the Indian aviation industry has a total order book of 1,700 aircraft, which is more than double the size of the current fleet in operation, which is over 600. The largest chunk of the orders have been made by Indigo, Air India and Akasa Air.
The deliveries, however, are likely to be gradual, spanning over the next decade, and will also be impacted by the current supply chain challenges encountered by aircraft and engine OEMs, finds ICRA.
Nevertheless, at an estimated 150-155 million, ICRA expects the domestic air passenger traffic to surpass pre-Covid levels in FY2024. International air passenger traffic for Indian carriers had already exceeded pre-Covid levels in FY2023 and is likely to surpass the peak of FY2019 in the current fiscal.
The industry has witnessed improved pricing power, as reflected in the improved yields and the spread between revenue per available seat kilometre for the airlines due to the 15 per cent decline in aviation turbine fuel (ATF) prices and the relatively stable foreign exchange rates.
However, the Indian aviation industry has lately been affected by engine failure issues and supply chain challenges. This has resulted in the grounding of at least 154 aircraft for select airlines, thus impacting overall industry capacity. The recent powder-coating related concerns in engines are expected to result in additional grounding of aircraft in Q4 FY2024.
The grounding is likely to result in higher operating expenses, attributed to increased charges and a surge in lease rentals due to substitute aircraft being taken on spot leases to offset the affected capacity.
This, coupled with lower fuel efficiency due to replacement with older generation aircraft, will adversely impact the airlines’ cost structures and may result in an increase in air fares.
