Global ratings agency Fitch Ratings on Wednesday came out with a healthy earnings outlook for Indian airline sector in 2016.
The bullish outlook for the Indian airline sector was disclosed in the global ratings agency's report -- 'Improved Earnings Outlook Likely for Indian and South-East Asian Airlines.'
According to the report, the earnings outlook for Indian and south-east Asian airline sectors should improve on the back of higher demand, lower fuel costs and ongoing industry restructuring.
"Macroeconomic growth should help bolster demand and top-line growth for the region's airlines, and data so far in 2015 is already showing strong demand growth," the report said.
Besides, the report pointed-out that continued decline in global oil prices will provide a much-needed boost to airlines' earnings.
In addition, industry consolidation and restructuring should result in improved profitability, the report said.
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Nonetheless, the report cautioned on aggressive competition and capacity expansion which remain key risks for the sector over the longer term.
"Capacity growth in south-east Asia and India has slowed in 2015 as airlines focused on profitability, but a huge order book for new aircraft remains, which could make it difficult to improve profitability for the sector," the report cited.