SpiceJet to enhance its fleet by another 10 aircraft by next month. File
| Photo Credit: REUTERS

Domestic carrier SpiceJet on Tuesday (October 8, 2024) said it will enhance its fleet by another 10 aircraft by next month with the first plane set to be inducted on October 10.

Seven of these aircraft will be acquired on lease, while three previously grounded ones are being reintroduced, SpiceJet said in a release.

The Gurugram-headquartered airline has only 19 aircraft in operations while as many as 36 planes were on grounded as of October 8 according to the live aircraft fleet tracking website, Planespotter.net.

The announcement comes on the back of SpiceJet securing ₹3,000 crore fresh capital infusion through QIP late last month.

The airline will receive an additional ₹736 crore from a previous funding round, further bolstering its financial stability and growth trajectory.

SpiceJet said it has already signed agreements for the leased aircraft, with the full induction of all seven planes expected by November 15.

Two of these leased aircraft have already arrived in India and are scheduled for immediate induction, the airline said, adding that it will also operationalise its grounded planes in phases, with the first three set to re-enter service before the end of November.

“This addition (of 10 aircraft) is crucial as we continue to meet the growing demand for air travel while strengthening our operational capabilities,” SpiceJet Chairman and Managing Director Ajay Singh said.

The momentum in air passenger traffic witnessed in FY2024 is expected to continue into FY2025, ICRA said. File. Image for representation.
| Photo Credit: The Hindu

Domestic air passenger traffic grew 5.1% year-on-year to an estimated 138.9 million in May and was significantly higher by around 14 per cent than pre-COVID levels, credit ratings agency ICRA said on Thursday.

ICRA also said the outlook on the Indian aviation industry is stable amid the continued recovery in domestic and international air passenger traffic with a relatively stable cost environment and expectations of the trend continuing in FY2025.

The airlines’ capacity deployment in the previous month increased 6% year-on-year and about 2% higher than April 2024, it added.

According to the agency, the domestic air passenger traffic for FY24 was around 154 million, with a year-on-year growth of around 13%.

It thus surpassed the pre-COVID levels of around 142 million in FY2020, the ratings agency said, adding that the international passenger traffic for Indian carriers stood at around 29.68 million last fiscal, registering a year-on-year growth of around 24%.

Moreover, the industry witnessed improved pricing power, reflected in the higher yields (over pre-Covid levels), it said.

The momentum in air passenger traffic witnessed in FY2024 is expected to continue into FY2025. However, further expansion in yields from the current levels may be limited, it added.

Average ATF price stood at ₹103,499/KL in FY2024, 14% lower than ₹121,013/KL in FY2023 but significantly higher by 58% than the pre-COVID levels of ₹65,368/KL in FY2020, according to ICRA.

In Q1 FY2025, the average ATF price remained higher by 5.4% on a year-on-year basis. In June 2024, it declined by 6.5% sequentially, the agency said.

Fuel cost accounts for around 30-40% of airlines’ expenses.

Around 45-60% of the operating expenses, including aircraft lease payments, fuel expenses and a significant portion of aircraft and engine maintenance expenses, are denominated in dollar terms.

Some airlines have foreign currency debt. While domestic airlines have a partial natural hedge to the extent of their earnings from international operations, overall, their net payables are in foreign currency, it said, adding that the airlines’ efforts to ensure fare hikes, proportionate to their input cost increases, will be the key to expanding their profitability margins.

The pace of recovery in industry earnings is likely to be gradual owing to the high fixed-cost nature of the business, the agency noted.

The industry reported a net loss of around ₹170-175 billion in FY2023 due to elevated ATF prices, along with the depreciation of the rupee against the U.S. dollar, it added.

ICRA expects the Indian aviation industry to report a similar net loss of around ₹30-40 billion in FY2025 as seen in FY2024, which is significantly lower from levels of around ₹170-175 billion in FY2023, as airlines continue to witness healthy passenger traffic growth and maintain pricing discipline.