India is booming and so is the civil aviation. Passenger traffic may reach 350 million by 2020, making India the third largest aviation market in the world. From 67.3 million in 2014 the fliers’ number has gone up to 139 million in 2018. This means an average annual growth of 20%. India’s fleet of 430 civil aircraft will likely double over 5-7 years. Correspondingly the maintenance, repair and overhaul sector will grow to $1.5 billion by 2020. Such a rapid growth will create scope for players for modernisation of airports, communications, navigation, and surveillance systems for air traffic management, and facilities for MRO.
DOMESTIC AIRLINES: PERFORMANCE PARAMETERS, JAN 2019
Market Share (%)
|Passenger Carried (mn)||Passenger Load Factor (%)|
According to CAPA India domestic traffic is likely to grow between 14%-16% in FY20. The huge market potential is attracting new players to India and prompting the existing ones to expand at a furious pace.
DOMESTIC AIRLINES: INTERTEMPORAL VIEW, 2014-2018
|Market Share||Traffic||Market Share||Traffic||Market Share||Traffic||Market Share||Traffic||Market Share|
*Air passenger traffic in lakhs (0.1 million)
* Market share in percentage points
Thus it is clear that low cost airlines, primarily IndiGo, have been driving the domestic air passenger growth in India. Naturally in the past five years operators like Air Asia, Vistara, Air Costa, and others have joined in. In January 2019 itself Star Air and Air Heritage have begun to claim a stake of Indian skies.
But India is a very tough market. Competition, costs, ticket pricing, government regulation… there are many headwinds. Jet Airways fate is hanging in balance. Air India is surviving on govt. dole. And while some like Air Costa have shut shops, others like Air Deccan are practically grounded. More shakeouts maybe in the opting.
It is a brutal but lucrative market, especially when we account for the fact that even the international air traffic to and from India has grown from 16.8 million (2014) to 25 million (2018), i.e. an annual average rate of about 11%.
Contributed by: K.K. Srivastava
KKS is an academic, author, writer, researcher, and corporate speaker. He writes regularly on Economics, Management, Technology, and others areas.