Vistara CEO says India's aviation industry continues to grow robustly, but external threats persist.

• The CEO of Vistara Airlines states that India's aviation industry is strong, but external factors pose the greatest threat to growth.
• Fuel costs and the depreciation of the U.S. dollar compared to the Indian rupee have always had an impact on the bottom line of airlines within India, as they are extremely sensitive to external pressures, as stated by the airline executive to CNBC's Sri Jegarajah.
• The Indian government has made substantial efforts to enhance the aviation industry and improve infrastructure.

The CEO of Vistara Airlines states that India's aviation industry is strong, but external factors pose the greatest threat to growth.

Vinod Kannan stated in an exclusive interview with CNBC that aviation demand in India is still progressing and moving in a positive direction.

He mentioned that growth could be affected by factors such as fuel costs and the strong U.S. dollar.

"Fuel costs and the U.S. dollar's depreciation compared to the Indian rupee always affect the airlines within India's bottom line, as they are highly sensitive to external pressures," he said to CNBC's Sri Jegarajah.

He emphasized the importance of monitoring fluctuations in oil prices.

In the past year, Brent crude prices have increased by 6.46%, while U.S. crude prices have risen by 7.64%, according to FactSet data.

The aviation industry in India is experiencing rapid growth, as the country is projected to become the fourth-largest global travel spenders by 2030. This is largely due to the increasing middle-income population, which is expected to see a significant increase in household earnings.

According to ICRA, the estimated domestic air passenger traffic in India for the financial year ended March 2024 is projected to be $154 million, which represents a 13% increase compared to the previous year.

The Indian aviation industry is expected to remain stable in the upcoming fiscal year 2024-25, due to the recovery in domestic and international air passenger traffic, a relatively stable cost environment, and the continuation of this trend, according to a statement.

The Indian government has made substantial efforts to enhance the aviation industry and improve infrastructure.

The number of operational airports in the country has increased from 74 to 148 between 2014 and 2023, according to official government data.

Kannan stated that aviation has consistently been a vital contributor to India's economic development.

"The creation of jobs in aviation leads to a multiplier effect, with three or four associated jobs in the ecosystem for every job created, and the government is aware of this."

"I think it's only going to improve."

According to Reuters, the National Company Law Tribunal approved the merger of Vistara and Air India last week.

Vistara is owned by Tata Group and the remaining 49% is owned by another entity.

In November 2022, the Indian conglomerate, which owns businesses in IT, steel, and automakers, announced the merger of Vistara and Air India. Following the merger, Singapore Airlines will have a 25.1% stake in Air India.

"Kannan stated that with the merger, the company would become the largest international airline in India, with a domestic market share of approximately 30%."

That would allow the carrier to scale up significantly, the CEO said.

— CNBC's Charmaine Jacob contributed to this report.