India has retained its position as the fastest growing airline market for the third consecutive year, according to an International Air Transport Association (IATA) and Oxford Economics report.
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The report lists factors such as sustained annual growth of between 14-15 percent in passenger traffic as a major contributor to growth in the sector. The combined passenger traffic is expected to double over the next five years.
Domestic traffic growth is expected to come from the smaller and UDAN cities, which are seeing rapid development of infrastructure to facilitate air routes.
An addition in capacity of up to 100 million is expected at UDAN scheme airports over the next 3 to 5 years. Increase in passenger capacity at airports such as Navi Mumbai International Airport and Jewar International Airport is also expected to boost passenger numbers.
Arline operators are expected to add between 500-600 aircrafts to their fleets over the next 5-7 years to match passenger numbers.
However, this sudden growth in Airline industry poses challenges such as rising crude oil prices, which would pressure already razor thin margins.
Other concerns include congestion at major airports, which also lead to delay in operations and a fall in operating efficiency of both airlines and airports.
The government's ambitious UDAN scheme has also failed to attract private investment beyond Tier-1 and Tier-2 cities and connecting airports with regional city centres continues to be a challenge in Tier-3 and Tier-4 cities across the country.