Passenger air traffic in India soars in 2016

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Calendar 2016 has been an impressive year for civil aviation in India with air passenger traffic growing steadily through the year in excess of 20 percent, quarter-on-quarter. Data made available by the Directorate General of Civil Aviation (DGCA) shows that total domestic passenger traffic between January and November of 2016 stood at 903 lakh, compared with 734 lakh reported in calendar 2015. That's a growth of 23 percent, despite the December 2016 numbers not being accounted for. [Passenger traffic for the month of December 2016 are yet to be released by the DGCA]. Much of this passenger traffic growth has been fuelled by the price of global crude oil which averaged around $43 per barrel in 2016. Lower fuel prices have allowed airlines to offer more competitive air fares all year round as well as expand their operations.

So, will 2017 be another year of growth for the Indian aviation market? While there are number of factors that could stall growth, the biggest worry is on the upward price movement of global crude oil. The World Bank forecasts that global oil prices could rise to $55 per barrel as members of the Petroleum Exporting Countries are preparing to limit oil production. Already the Indian government, on January 1, 2017, has raised aviation turbine fuel (ATF) prices by 8.6 percent based on global crude oil prices and foreign exchange rates.