Aviation industry to grow at 11 pct in medium-term: Icra
- IPL spot-fixing: Chennai Super Kings owner's kin under police scanner
- BJP tears into UPA govt on 4th anniversary, says it lacks leadership
- Jessica Lal murder: Actor Shayan Munshi, ballistic expert Manocha to face perjury trial
- India seeks access from US to 26/11 terror convicts Headley, Rana
- BSE Sensex falls 49 pts, Larsen & Toubro Limited shares hit by Q4 data
The domestic aviation industry is set to grow at 11 per cent in the medium-term as some of the cyclical variables become less spiteful, ratings agency Icra said in a report.
The industry witnessed a sub-10 per cent compounded annual growth rate in the past five years, it said.
However, pressures in the near-term remains, the report said, adding that the rising disposable incomes and the willingness to spend on air travel is likely to drive demand going forward.
The higher cost of travel and the impact of economic slowdown have affected passenger traffic growth during the current year, which, over the past five years has grown at a CAGR of 9.2 per cent, the report said.
According to the agency, after years of steady increase in capacities, the capacity addition declined 3.2 per cent during the current fiscal largely due to the grounding of Kingfisher Airlines and route rationalisation by other carriers.
The overall operating environment for the domestic carriers is now showing an improving trend on the back of government allowing foreign airlines to invest up to 49 per cent in private domestic carriers, the industry's effort to maintain pricing discipline and attempts to rationalise cost structure by both full-service as well as budget carriers, besides enhancing ancillary revenues.
With multiple headwinds, sharp increase in operating losses and accompanying weakness in their balance sheets, the carriers have adjusted their business models and they have also implemented rigorous cost rationalisation measures right from phasing out loss-making routes to renegotiation of maintenance contracts to ride over the turbulent phase, the report said.
These initiatives are likely to help domestic carriers in overcoming the adverse impacts of high oil prices and currency depreciation, the report stated.
According to the report, allowing 49 per cent FDI in domestic carriers could address their funding issues, which have long been facing difficulties.
- Fixing probe now reaches Bollywood, son of Dara Singh held
- BCCI cashes Pune Warriors guarantee, 'disgusted' Sahara walks out of IPL
- Sreesanth spent Rs 1.95L on clothes, bought friend BlackBerry, paid in cash: Police
- Delhi firm with MoD as client is linked to Pak cyberattacks
- After Infosys, iGATE sacks Phaneesh Murthy for sexual misconduct
- 2 weeks after harassment, Haryana schoolgirls return, cops in tow