Fuel Costs and Currency Weakness Pressure Indian Aviation in Mid‑2024

New Delhi, August 3 – Indian airlines are grappling with a dual squeeze: record‑high aviation fuel prices and a rupee that has weakened to about 95.4 against the U.S. dollar. The financial‑services firm Equiras reported that these factors are inflating aircraft leasing, maintenance and other dollar‑denominated operating expenses.

Despite the cost pressure, June’s international traffic remained resilient, with roughly 2.4 million passengers traveling abroad – a 4% increase over May, though still below the same period last year. Domestic passenger load factor stayed robust at 85.7%, reflecting efficient seat utilisation even as total domestic passenger numbers slipped to 13.5 million, a 1% year‑on‑year decline.

Revenue passenger kilometres (RPK) were steady at about 13.3 billion, while available seat kilometres (ASK) fell 2% due to capacity trimming. The report notes a mixed operating environment: demand remains solid, especially in the domestic market, but the rising cost base could erode profitability if fuel prices and currency weakness persist.

Airlines are expected to continue optimizing capacity and managing costs while monitoring the recovery of international routes, which have shown a 6% month‑on‑month rise in departures. The sector’s outlook hinges on how quickly fuel costs stabilize and whether the rupee can regain some value against the dollar.