Domestic aviation industry is likely to see a strong growth period with air traffic estimated to grow at 14 per cent helped by a positive outlook for crude prices, says a report. However, the report by ICICI Securities noticed that the growth rate of 14 per cent is low considering that the average annual growth rate of passenger-traffic in India has been more than 18-20 per cent since 2000.
“India’s aviation sector is set to undergo a strong growth period, which should benefit all incumbent players, particularly on a benign crude price outlook,” the report said. “Our supply-demand model for domestic air traffic implies 14 per cent growth in passengers as evidenced from firm aircraft orders and latest delivery schedules,” it said. Further, the report noted that air fare corrections on account of lower crude prices have already played out with up to 15 per cent dip in fares in 2015-16.