Indian aviation sector charts 17.3% growth in 2017
According to Directorate General of Civil Aviation (DGCA), the domestic airlines carried 117.2 million passengers during January-December, as against 100 million during the same period in 2016, thereby charting a growth of 17.3%.
The first two months of 2018 also saw 22% yoy passenger growth. Hence, monthly PLFs for major airlines have been on the constant rise.
Indigo maintained the highest market share of 40% followed by Jet Airways, Air India and SpiceJet at 14.3%, 13.3% and 12.6% respectively during Financial Year 2018 (data available till February 2018).
Aviation Turbine Fuel (ATF) contributes about 30-35% of airlines’ cost of operations. The ATF prices increased sharply since July 2017 trailing the Brent crude price increase. The ATF prices averaged around INR 56,450 per kilolitre in Q3FY18, 12% higher than the year-ago period. The price surge has affected operating margins in the sector.
The Indian aviation sector is poised for growth based on lowering cost of air travel, growing middle-income population and capacity constraints in other public transport services such as Railways.
In addition, government’s ambitious plan- UDAN (Ude Desh ka Aam Naagrik) a Regional Connectivity Scheme (RCS) is aimed at connecting small cities to metro cities at affordable prices will support the development of all regions and states of India. The scheme is expected to add 1.3mn new passenger seats across new networks. Also, fleet modernisation by the airlines will protect their profits despite ATF price pressures.