Airlines Sector:

• Air travel rises with a country’s wealth.
• India is currently 9^th largest civil aviation market in the world.
• Domestic seats per capita
• India = 0.08
• Brazil = 0.5
• Thailand = 0.5
• Indonesia = 0.5
• China = 0.7
• Canada = 1.6
• USA = 2.6

• India is slated to become 3^rd largest aviation market by CY2020 and The Largest by CY 2030.
• Lower cost of air travel, narrowing rail-air fare discount coupled with stable / low fuel cost are WIN-WIN situation for passengers and airline companies
• In Q4 FY16, Indian domestic passenger traffic grew 23.5% ankilod International passenger by 7.8%.
• The Aviation turbine fuel (ATF) stood at Rs.40161 per kilo litre in Q4 FY16 (down 25% YOY). ATF accounts for 40% of the operation cost.
• Indigo is market leader with 34% market share. It is expected to grow at 12% over the next decade. Inspite of reporting consistent profits for the past seven years, Indigo reported flat growth in net profit at Rs.579.31 Crores (vs 577.3 Cr an year ago)
• Spicejet reported net profit of Rs.9.50 Crores vs net loss of Rs.38.84 crores.
• Net sales of Jet Airways grew 4%, Indigo 7% and spicejet 86%.
• Government’s efforts to revive 50 low cost / no-frills airports across India in the next 3 years can be the game changes for Indian aviation industry.
• Ability of airlines to stay profitable depends on its ability to pass on the increasing cost of fuel on to the customers.
• Till such time crude hovers below US$ 60, airlines may be a story worth watching. But beyond that as the wealth (per capital income goes up), airlines is set to fly high.