A STEADY FLIGHT

The Indian aviation industry is poised for significant growth despite recent challenges

Many people had hoped that consumer discretionary and non-essential sectors would do well after the coronavirus pandemic, as any improvement in these segments would signal that the economy was out of the woods.

Of the sectors that fall under the umbrella of ‘consumer discretionary,’ the aviation industry has experienced a marked improvement in demand. Today, the anxiety and uncertainty surrounding travel are not as high and palpable as they were two to three years ago.

In this context, an important question on investors’ minds is whether the future outlook for India’s aviation sector is stable. To gain a holistic understanding of the industry’s prospects in the coming months, let us consider various factors.

THE CHANGING INDUSTRY LANDSCAPE

In the past three years, India’s aviation industry’s landscape has changed for the better. Among the various variables that are important for recovery, almost all are favourable for the industry.

First, passenger traffic in the aviation industry has been on the rise. According to official data, domestic passenger traffic increased by 60% to over 13.6 crore in FY23, compared to the previous year. Although this is still lower than pre-pandemic levels, where passenger traffic reached 14.15 crore in FY20, industry experts and analysts believe that the momentum in passenger traffic will continue and bridge this gap in the coming months.

Even India’s international passenger traffic has also grown over the past 11 months of FY23 and is now almost at par with pre-pandemic levels. Official data shows that in the 11 months of FY23, India’s international passenger traffic remained stable at 2.16 crore. In the same period of FY20, which was the pre-pandemic benchmark, India’s international passenger traffic was close to 2.17 crore.