Air travel in India on a higher plane

MUMBAI: Though aviation stocks have lost altitude on the bourses, air travel in India is booming like never before. The Airport Authority of India (AAI) figures for the month of April, show a 46% year-on-year growth in passenger numbers.

Growth has been phenomenal on both the domestic and international routes and the new figures put India in the top position on the global airport league tables. Domestic traffic in April ’06 grew by 58.6% over last year, while international traffic grew 19.6%, with a total of 12.3m passengers travelling through the airports during the month.

“In March, passenger traffic had grown 46% over the previous year and if the trend continues, growth projections made earlier will have to be revised upwards”, says DP Singh, general manager (traffic), Airport Authority of India. Indian airports saw an overall traffic growth of 24% during ’05-06.

“Air traffic in terms of passenger and aircraft movements (landings and take-offs at the airports) has seen a big jump because of the overall buoyancy of the economy, combined with the entry of the low-cost carriers (LCCs),” says Mr Singh. Growth in India is now the highest in the world, with the Chinese airports coming second.

The Centre for Asia Pacific Aviation (Capa), a Sydney-based aviation think-tank has forecast a growth of over 25% in the next five years and projected over 70m domestic passengers by ’10. At the current 28% growth rate, India is the world’s fastest-growing market, albeit from a low base.

“The growth will continue over the next few years because less than 1% of India’s 1.1bn people currently travel by air,” says Capt Gopinath, managing director of Air Deccan. The Bangalore-based airline has been the beneficiary of the traffic boom and has improved its own market share.

Airline market figures for May show its share has increased to about 18%. This takes it within spitting distance of the national carrier Indian’s share of 23%. However, the official Directorate General Civil Aviation (DGCA) figures for May have yet to be made public.

The Chinese airlines carried 150m passengers last year and traffic in the middle kingdom is growing at 15%. However, the big difference between the two countries is that China has made huge investments in its airport infrastructure, while India is just taking its first steps in this direction.

The International Air Transport Association (IATA) has projected air traffic in Asia to grow by 6.5% per year until ’09, led by demand from the two countries. Indian airlines placed orders worth about $12bn at the Paris Air show last year. The long term outlook for the airline market is widely believed to be bullish.

However, the combined effect of the rising fuel costs, intense competition, dilapidated infrastructure in the form of crowded airports, overworked air traffic controls and a shortage of airline staff may prove to be very troublesome. These are expected to toughen market conditions for most of the players in the near term.