Domestic Aviation sector in India witnessed unprecedented growth
The domestic aviation sector in India has witnessed strong growth over the past decade. More airlines are operating on domestic routes, airports are expanding capacity, and passenger traffic has increased manifold. This article analyzes the key trends and developments that have shaped the domestic aviation landscape in India.
Rise of Low-Cost Carriers
The entry and success of low-cost carriers like IndiGo, SpiceJet, GoAir etc. have been the biggest drivers of growth. These carriers focus on point-to-point travel and offer low base fares without free meals and baggage. This made air travel affordable for the masses. They now command over 80% market share in the domestic market. Their standardized fleets of Airbus or Boeing aircraft also helped reduce operational costs and maximize efficiency. The low-cost model has brought about a culture shift making flying a reachable transportation option even for the common man in India.
Expansion of Airport Infrastructure
Airports across major cities like Delhi, Mumbai, Bengaluru etc. were struggling with capacity constraints due to rising traffic. Recognition of aviation as a priority sector has resulted in massive investments to develop new terminals and expand existing ones. Greenfield airports have also come up in tier-2 cities. For example, the new Navi Mumbai airport will help decongest the Mumbai airport. New runways, taxiways, terminals, aerobridges are being added. The government is also working to upgrade scores of regional airports under the UDAN scheme to improve regional connectivity. These infrastructure initiatives are creating a conducive environment for the industry’s growth.
Rising Domestic Passenger Traffic
As incomes rise and airfares become more affordable, domestic passenger traffic has shown handsome growth over the years. It surpassed the 100 million mark in 2018-19 growing at a rapid pace of 18-20% annually during the last 5 years. During COVID-19 as well, domestic traffic rebounded quicker than international due to short haul travel still being viable. With a huge population of over 1.3 billion and only 0.08 airplanes and 0.025 pilots per 1000 population, India has strong potentials to become one of the top aviation markets globally.
Government Policy Support and Regulatory Environment
Recognizing aviation as a tool for social inclusion and economic progress, the government has taken notable steps like lowering taxes on ATF (Aviation Turbine Fuel), implementing UDAN regional air connectivity scheme, and updating FDI policies. The liberalized FDI policy and Ease of Doing Business initiatives have encouraged foreign players like AirAsia and Vistara to enter the market. The regulator DGCA has also focused on safety, training and licensing requirements to boost standards. While some issues remain around high airport charges and taxes, the overall environment is progressive and supportive of growth.
Other Notable Developments
Some other important trends include the widespread use of low-cost metros and high-speed trains complementing air travel on shorter routes. Several new MRO (Maintenance, Repair and Overhaul) facilities are also coming up as the fleet sizes increase. Domestic air cargo transportation is experiencing a boom driven by e-commerce. Regional connectivity is improving through schemes like Krishi Udaan for perishable agri-products. Indian airlines are also exploring international expansion plans like setting up bases in neighboring countries. The manufacturing of aircraft components under the ‘Make in India’ initiative will provide further stimulus in the long-run.
Challenges Ahead
While India has seen impressive growth, there are challenges which need to be tackled. Airport infrastructure still lags demand in many cities. High ATF prices due to taxes remain a burden. Skilled pilot shortage is a bottleneck restricting expansion. Environmental issues around noise and emissions pollution will require mitigation measures. The economic impact of the recent coronavirus pandemic has slowed down traffic but traffic recovery has still been faster than international routes. India still only accounts for 1.7% of global passenger traffic indicating considerable growth potential to be tapped. With policy support and incentives for regional growth, Indian aviation can sustain double-digit annual growth over the next decade.
To summarize, the Domestic aviation sector has exhibited phenomenal growth driven by factors like low-cost carriers, investments in airport infrastructure and policy initiatives like UDAN. This has created a positive cycle making air travel mainstream for various strata of society and supporting socio-economic progress. While near-term challenges persist, the long-term opportunities and potentials for Indian aviation remain enormous due to favorable growth fundamentals like rising incomes, population and overall economic expansion. With continued policy nurturing, domestic aviation could transform mobility within India and bring regional areas at par with major cities.
Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
