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Indian Aviation Spreading its Wings
Jun 20, 2017

India's aviation industry is on a high-growth trajectory. According to International Air Transport Association (IATA), India has moved up two places to become the fourth largest aviation market in terms of passenger number. It's expected to become the third-largest by 2020.

The latest DGCA data support the growth story. Domestic air passenger traffic surged nearly 17.4% YoY to 10.2 million in May 2017. In May 2016, this figure was 8.7 million. The aviation industry has reported passenger traffic growth of 17.6% during the first five months of the current calendar year.

Interestingly, the state-run carrier Air India, which is in the news for likely privatisation, improved its market share marginally in May 2017. The carrier's share rose to 13% from 12.9% in April, though still below 14% that it had in January.

Airlines are maintaining healthy load factors backed by low fares. Load factor is a measure of airline capacity utilization, generally used to assess how efficiently a transport provider fills seats and generates fare revenue. The passenger load factor in the month of May 2017 has shown an increasing trend compared to previous month primarily due to the beginning of tourist season.

Although greater air travel is becoming a new normal, investors need to understand the industry dynamics before buying up aviation stocks.

Data Source: DGCA

This Chart Of The Day was published in The 5 Minute WrapUp - Should You Have Followed Rakesh Jhunjhunwala into Delta Corp?

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