Domestic air traffic is expected to grow 25 per cent and cross 130 million in financial year 2017-18, but airlines will see bigger risks to profitability because of rising costs and yield pressures, aviation consultancy CAPA has said in its India outlook which it released recently.
Domestic traffic has been rising at 20 per cent plus for the past three years and, in 2016, carriers flew close to 100 million passengers.
The growth trend will continue and airlines will add over 60-65 planes. Most of these additions will be by low cost airlines.
CAPA expects industry-wide losses in the country to grow from $250-300 million to $380-450 million in FY17 and FY18, respectively. Losses are likely to increase in Air India, AirAsia India and Vistara. Further, airlines will face yield pressures and find it difficult to cut costs. Other domestic airlines will continue to make profit, the consultancy said.