Expect 12–14% growth in aviation industry for 2024: Crisil’s Padmanabhan

Bounce back and sustained growth in air travel, the path to profitability being re-established for airlines and airport operators, Indigo flying 100 million passengers, and aircraft leasing taking wings in GIFT City are some of the hits. Go-Air suspending commercial operations due to technical issues, grounding aircraft due to supply chain issues, and elevated ticket prices in certain pockets are some of the misses.

We expect a growth of 12 per cent to 14 per cent in 2024.

From a demand perspective, we can see sustained growth for the medium term, Supply side issues related to supply chain issues for aircraft engines and profitability issues on select airlines can be some of the key monitorable issues, along with ticket prices being in the affordable range, i.e. ~ ₹4,000–5,000 for a distance of 1,000 km

Aviation growth is tightly linked to economic growth, and with the interest rate cycle peaking and modest growth being expected, its important we don’t face any further supply-side shocks. We are certainly not out of the woods on this one.

While the structure almost mirrors a duopoly, it is important that the customer asserts their position and rewards those airlines from a value and product delivery perspective. The Indian aviation market is growing, and there is enough room for more airlines to operate. While we could see a sudden spurt in ticket prices, a sustained increase or maintaining prices at elevated levels will encourage travellers to explore alternate modes. Aside from that, the real competition for this duopoly will have to come from railways.

One airline has gone bust, another is struggling with finances and maintenance, and a third has internal concerns over pilots’ retention. So, is the customer benefiting at all? Does the government need to step in with some regulations, especially pricing mechanisms?

There is certainly a void in terms of product availability and innovation for the customer. Its also good that some of the established airlines are sticking to the tried-and-tested model. As the dust settles down (that is, Covid recovery in full), we could see more differentiated products being offered in the market. Pricing should still be left to market forces.

From a sectoral perspective, we see finances being dictated by the operating efficiencies of individual airlines; there is no structural challenge as such.