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Indian Airlines capacity to jump to 25% over next 3-4 years

2016 12 28

MUMBAI:  The airlines are set to add an additional capacity of 20-25 per cent over the next three to four years, even as mounting competition and price war are eating into their yields impacting the bottomlines, says a report.

Despite falling yields, due to increasing competition and the resultant hit on profitability, the airlines' capacity addition is set to clip at CAGR of 20-25 per cent over the next three-four years, domestic rating agency Icra said in a report today.

"The industry-wide ASKMs are slated to grow at a strong CAGR of 20-25 per cent over next 2 to 4 years. This will be driven by sizeable order backlog of the market leader Indigo, and also at GoAir, Jet Airways and SpiceJet coupled with the expected fleet expansion of Vistara and AirAsia.

"The capacity expansion will also be boosted by the launch of two new airlines, Air Carnival and Zoom Air," the report said.

Domestic air traffic continued its healthy growth this fiscal, with an annual growth of 22.5 per cent in the first half of current financial year, making the domestic market the fastest-growing aviation market in the world.

Domestic air traffic continued its healthy growth this fiscal, with an annual growth of 22.5 per cent in the first half of current financial year, making the domestic market the fastest-growing aviation market in the world.

The comparative numbers for the second growth market of Russia is way below half of it at around 10 per cent, while China is at around 6 per cent and the US, the largest market at 3-4 per cent.
 

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