With an estimated 14 percent increase in air traffic, India's domestic aviation industry is poised for strong growth, reported Press Trust of India. Citing a report by ICICI Securities, the report added that the growth is particularly driven by a positive outlook for crude prices.
On the flip side, it noted that the growth wasn't sufficient given that in the past 16 years passenger traffic has surged between 18-20 percent a year on an average.
"Our supply-demand model for domestic air traffic implies 14 percent growth in passengers as evidenced from firm aircraft orders and latest delivery schedules," it said.
However, air fare corrections due to a dip in crude prices is not a factor contributing to increase in traffic, as the current prices are already 15 percent lower in 2015-16. Further, air fares are expected to stabilise as oil prices also settle going ahead.
Highlighting another near term benefit to the industry, the report said there was still enough capacity within the top airports in main metro cities. About 45 million excess capacity remain within top airports, which hold 90 percent of the cumulative traffic in the country.
The growth in India's aviation industry and lower crude oil prices are the factors that are bound to benefit all incumbent players, even the ones whose businesses have been hit in the recent years, said the report.