Demand trends in the aviation sector remained robust in Q4FY25 as per various indicators spanning daily traffic, Passenger Load Factor (PLFs), management commentaries and media reports. This is particularly positive considering Q4 being a typically weak quarter followed by seasonally strong Q1. ICICI Securities said that December is typically a seasonally strong month for air travel with total domestic pax up by 4.8 per cent MoM to 14.9 million in Dec’24 (implying average daily passengers of 481k). January 2025 saw the momentum continuing with average daily passengers at 485k (basis 24-day daily data from MoCA).
A big push here was the increase in flights because of Maha Kumbh in Uttar Pradesh. According to media reports, Prayagraj Airport in Uttar Pradesh has been handling over 100 flights per day, a seven-fold increase from just 16 daily flights it used to handle before Maha Kumbh -2025.
“We remain constructive on IndiGo basis continuing the thesis of favourable supply-demand balance in the Indian ecosystem with possible levers of premiumisation and internationalisation,” ICICI Securities said.
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PLFs continue to remain above 90% in Jan’25
The analysis report by ICICI Securities stated that PLFs for IndiGo had seen a sharp decline in Q2FY25 to 82.7 per cent but it increased significantly in Q3FY25 to 86.9 per cent with both Nov-Dec’24 having PLF above 90 per cent. This trend has continued in Jan’25 as well with average PLF for IndiGo at 90.6 per cent (basis 24-day daily data from MoCA).
Management commentary on yields
In the Q3 earnings call, management commentaries indicated possible low single-digit YoY decline in passenger yields in Q4. This is better than guidance of mid to high single-digit decline in yields mentioned by the management for Q3FY25 during Q2 earnings call. The guidance of low single digit YoY decline in yields coupled with strong demand trends seen in Jan’25, ICICI Securities said, augur well for IndiGo in a seasonally weak Q4.
Premiumisation to support RASK
In November 2024, IndiGo started its business class offering ‘IndiGo Stretch’ with six flights on BOM-DEL route and by end-Dec’24, all 20 flights on BOM-DEL route offered business class.
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