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The Indian aviation industry is growing at a rapid pace, thanks to air transport deregulation, emergence of new operators, lower fares and large untapped demand for air travel. The numbers tell an interesting story: India will require an estimated 1,100 aircraft. The average annual passenger traffic growth in India through 2025 is estimated at 7.7 per cent, well above the world average of 4.8 per cent and China's 7.2 per cent. The Indian aviation industry is growing at a rapid pace, thanks to air transport deregulation, emergence of new operators, lower fares and large untapped demand for air travel. A study conducted by KPMG suggests that the air passenger traffic is likely to reach 100 million in 2009-10. The main drivers of air traffic are economic upswing, concentration of population, industries and liberalisation leading to higher propensity to travel. In 2006, foreign tourists arrival increased by 12.1 per cent vis-à-vis the previous year. With increase in health tourism, the influx of foreign tourists is likely to grow at a faster rate. At the same time the number of Indians going abroad has been rising considerably in the last couple of years. The spike in air passenger traffic is largely triggered by the emergence of low-cost carriers in the domestic sector. The penetration of low-cost carriers in small towns, coupled with exceptionally low airfares comparable with railway AC fares has raised the competition to a new level. India is the only country where the number of air travellers a year equals the number of rail passengers in a day. The growth potential in this sector is huge as there are more first-time flyers queuing up to fly. Although the new budget airlines have made huge losses in the last few years consistently, the low-fare model is here to stay. In fact, operators are putting orders for new aircraft. For instance, Kingfisher Airways CMD Vijay Mallya said that his airline has placed order for at least 18 aircraft in 2007. Currently, India has about 250 aircraft operating domestically. While budget airlines are exploring new routes in small and semi-towns to cater to the huge untapped market, there is an urgent need for more aircraft. European aircraft manufacturer Airbus Industrie predicts that the Indian market will see a requirement of over 1,100 aircraft in the next 20 years. The Brazilian aircraft manufacturer Embraer estimates that India would need over 165 aircraft of 30-120 seater category till 2026. Among the few large orders placed with Airbus Industrie last year include Indigo Airline's plan to buy 100 aircraft and Indian Airlines deal with Airbus to purchase 43 aircraft. Boeing has received an order for 68 aircraft from Air India. While the offer of cheap tickets and the convenience of choosing between different airlines and flight timings are luring domestic flyers, there are other issues that need attention. If one talks to regular flyers today one will come across endless tales of how flights circle above airports, waiting to land, or they are made to wait endlessly in aircraft because of the long queues of planes either waiting to take off or land. With new airlines entering the market and the existing foreign airlines increasing the number of flights to India, the situation on the ground as well as in the skies is getting worse for travellers. Now there's a pressing need to modernise the infrastructure of Indian airports. Privatisation of airports is not a new concept. It gained momentum post-1980s across the world. Significant privatisations have occurred in the UK, Australia and Canada. The first milestone has already been achieved with the government privatising the Delhi and Mumbai airports, which handle a substantial of chunk of the total air traffic. Government will be also upgrading facilities of 35 non-metro airports. The modalities of privatising of Kolkata and Chennai airports are being worked out. Singapore's Changi Airports International was reported to be in talks with a realty developer to set up a JV to bid for Chennai and Kolkata airports modernisation programme. The only solution to air traffic congestion is to upgrade landing and take-off facilities at all airports. ATF constitutes 30-35 per cent of the operating costs and an increase in fuel prices could result in skyrocketing of fares. In such a scenario, the worst hit will be low-cost carriers, which have been in the vanguard of the aviation revolution in the country.
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