India's Aviation Set for Major Expansion in 2024 Amid Supply-Demand Imbalance

India's aviation industry is expected to witness substantial growth with the addition of over 150 new aircraft in 2024. Despite this, the industry still faces a demand-supply gap that could keep airfares high. The surge in passenger traffic post-COVID and falling fuel prices are notable trends highlighted in the Nuvama report.

India's aviation industry is on the brink of significant expansion, with domestic airlines poised to introduce over 150 new aircraft in 2024—a remarkable 37% year-on-year increase, according to Nuvama's research report. Despite this notable fleet augmentation, the current aircraft numbers are insufficient to meet the sector's rapidly rising demand, suggesting that airfares are likely to remain elevated in the coming months due to the demand-supply mismatch.

The industry is on an upward trajectory, with passenger traffic surpassing pre-COVID levels by 11% in fiscal year 2019. "Domestic carriers are set to add over 150 aircraft in 2024, a 37% rise YoY, yet this won't suffice to meet the burgeoning demand," the report stated. Both domestic and international passenger movement averages approximately 32 million monthly, underscoring the urgent need for more aircraft.

Key industry metrics like Available Seat Kilometers (ASKM) have seen a steady rise, with a 14% YoY and 2% month-on-month increase in August 2024. IndiGo maintains a dominant 58% share of the domestic ASKM, while the Air India group leads in the international segment with a 54% share. The sharp decline in Aviation Turbine Fuel prices, down 18% YoY in September 2024, offers some financial relief to airlines facing ongoing supply-demand pressures.

(With inputs from agencies.)