Strong market leadership, robust demand to help IndiGo stock soar

India's civil aviation sector has strong growth trends in the medium to long term, but geopolitics has had a short-term impact on international travel.

- DEVANGSHU DATTA

Many flights were cancelled during the Iran-Israel conflict and there are fears of crude oil supply disruptions, causing price volatility in a key input.

In addition, the crash at Ahmedabad has led to Boeing 787 fleets being grounded, causing further flight disruptions and it has also led to Air India being badly hit due to 787 exposures.

India is expected to see close to 10 per cent compound annual growth rate (CAGR) in passenger volumes over the next two to three years and it is among the lowest penetrated markets per capita despite being the third-largest.

The number of working airports has risen to 162 from 74 in 2014, with plans to develop another 50 airports in the next few years.

Supply chain issues and technical hurdles have slowed aircraft deliveries from Boeing and Airbus to 5-6 years (from earlier 3-4), which has led to demand-supply gaps.

IndiGo (InterGlobe Aviation) is a gainer in terms of market share while the longer-term trends for Indian aviation seem quite favourable.

There's been steady growth in passengers, and scaleup in the network of airports and routes.