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Construction : Web Exclusive | December 2017 | Source : Infrastructure Today

Twin headwinds threaten to alter Indian aviation’s flight path

Despite a raft of policy facilitations, domestic airlines are flying into two major headwinds – crippling infrastructure constraints at major airports, and an uptick in fuel prices – which could mean growth in domestic air passenger traffic may have peaked out for the medium term.

CRISIL Research sees growth decelerating ~800 basis points (bps) to 13-15% annually in the five fiscals through 2022, compared with a blistering 22% seen in fiscals 2016 and 2017. This fiscal, it’s seen slowing 300-500 bps to 17-19%.

Passenger traffic took off in the past two fiscals as fares fell following a decline in crude oil prices to an average $48 per barrel in 2016 compared with $108 in 2014. That also brought down the operating cost – aviation turbine fuel accounts for ~30-35% of the cost – of carriers.
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