130mn domestic flyers by FY2018

Domestic traffic could grow by close to 25 per cent in FY2018 and approach 130 million passengers. However, demonetisation and the uncertainty surrounding GST could temper the domestic traffic growth in the country by 3-5 per cent.

Traffic growth at Indian airports FY2016 to FY2018F

traffic-growth
 

Actual and projected combined net profitability of india’s airlines FY2007 to FY2018F

airline-profitability
Source: CAPA Research
 

  • Traffic growth remained strong in December 20165 suggesting that there is no visible impact as of yet. However, the purchase of air travel using some withdrawn denominations was permitted until the first half of December 2016 which may result in a delayed impact in the first half of FY2018.
    Indian carriers are expected to seek to raise $1 billion of capital next year, led by Jet Airways at $300-400 million
  • Jet Airways planned to raise $300-400 million but its capital raising activities were delayed due to a change in strategy
  • AirAsia India and Vistara are likely to require significant recapitalization in FY2018 to provide for much larger war chests in the face of strong competition
  • However, the Indian government’s recent bold decision to permit 100% foreign direct investment in domestic carriers is unlikely to result in any transactions to that level in FY2018