Pointing to the two major headwinds-- infrastructure issues at major airports and pricey fuel, credit rating agency, Crisil in its latest report has said that these two factors may impact Indian aviation’s flight path and would reduce passenger growth by an average around 800 bps to 13-15% annually in the five fiscals through 2022, as against 22% growth seen in the last two fiscal years.
As per the report, low fare prices on cooling crude oil prices had led passenger traffic growth in the last two fiscal years, but expectations of rise in crude oil prices to $50-$55 per barrel over the next five fiscals would rise the airfares and this would result in moderate passenger traffic growth.
Crisil further said that the bigger problem is the severe congestion at airports metastasizing into structural gridlocks, adding that Mumbai and New Delhi airports are edging towards capacity crunch during peak hours, which is amplifying the infrastructure constraints. The ratings agency further noted that though the airlines have started deploying bigger aircraft to deal with congestion issues, it is beneficial for the short term only. So there is need of significant investments in airport infrastructure to help the industry grow faster.