Domestic aviation industry on recovery path; passenger traffic 60% higher in FY23

Despite remaining 4% below pre-pandemic volumes of 14.15 crore, domestic air passenger traffic has increased by almost 60% YoY, logging in at around 13.60 crore in FY23, according to ICRA. The overall airlines' capacity deployment for FY23 was higher by 38% compared to FY22, while last month's deployment was around 7% better than pre-COVID levels of March 2019. However, the domestic aviation industry is still hampered by the high cost of aviation turbine fuel and the rupee's depreciation against the US dollar, which impacts airlines' cost structures. The industry's profitability margins will depend on ensuring fare hikes proportionate to input cost increases.

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