Icra maintained a stable outlook on the domestic aviation industry in light of the ongoing recovery in domestic and international air passenger traffic, along with a relatively stable cost environment. According to the agency, the momentum in traffic growth is expected to persist in FY2025, with a similar estimated year-on-year growth. This is anticipated to be supported by increasing demand for both leisure and business travel and enhancements in airport infrastructure.

In FY2023, the international passenger traffic for Indian carriers surpassed pre-Covid levels, although it lagged behind the peak levels of 25.9 million observed in FY2019, according to Icra. The ratings agency predicts that this level will be surpassed in the current fiscal year, with an estimated 25-27 million passengers, reflecting a year-on-year growth of 7-12 percent. Furthermore, it is anticipated to grow by 7-12 percent more, reaching 27-29 million in FY2025.

Icra's Vice President and Sector Head for corporate ratings, Suprio Banerjee, stated, The industry has witnessed improved pricing power, as reflected in an increase in yields and thus the spread between revenue per available seat kilometre-cost per available seat kilometre (RASK-CASK) for the airlines. He added that the same is expected to remain favourable, supported by a decline in aviation turbine fuel (ATF) prices and the relatively stable foreign exchange rates.