Mumbai: Shares of airline companies have continued their uptrend since the last three weeks after better-than-expected passenger data kept up hopes of robust earnings for the December quarter.

In the last three weeks, Jet Airways India Ltd gained 19.4%, SpiceJet Ltd 16.4%, while InterGlobe Aviation Ltd rose 8%.

The Directorate General of Civil Aviation has published data saying the domestic airlines flew 24% more passengers in December from a year ago. The sector recorded 22.45% passenger growth.

“The recent rally in the stock price might be in the anticipation of in-line results from the aviation sector. Normally, Q3 is a strong quarter for the sector," said Sundar Sanmukhani, head of fundamental research at Choice Broking.

Jet Airways has been reporting profits since the last six consecutive quarters and SpiceJet since seven consecutive quarters. Capitaline has data for Interglobe Aviation since December 2014 and it has reported profits in all the quarters since then.

Analysts believe that demonetisation did not hit the aviation sector in a big way. “The impact of demonetisation has been negligible on the domestic aviation passenger traffic as growth in domestic passengers was more than expected," Sanmukhani said.

India’s domestic air passenger traffic has almost doubled in the past six years led by strong economic growth and emergence of low-fare airlines. Indian airlines flew 99.88 million passengers in 2016 compared with 51 million in 2010, data shows. Airlines also flew more passengers per flight on an average. Average seat occupancy rates rose to 83.9% in 2016 from 76.6% in 2010, Mint reported.

The sector also expects stimulus to boost the aviation industry through regional connectivity and cargo routes as envisaged in the budget.

In budget FY16-17, the government unveiled measures such as tax exemption for MRO (maintenance, repair and overhaul) activities to promote India as destination of regional MRO hub in the subcontinents.

“Despite India’s growing middle class population and rising disposable income, the aviation market is still untapped where many airports are lying either un-served or underserved," said Abnish Kumar Sudhanshu, director and research head, Amrapali Aadya Trading & Investment.

“Scheme to promote regional connectivity between these airports located in industrial and tourist hubs is set unlock a new market. Further, the national civil aviation policy has also given thrust to boosting air cargo business, especially against the backdrop of rising e-commerce activities and exports," Sudhanshu added.

However, analysts expect higher crude oil prices and dollar differential could impact the margins of these companies.

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