When Will India’s Aviation Industry Soar?

India’s civil aviation industry has come into the spotlight. It is among the fastest growing industries in the country, and India is poised to become the world’s third largest aviation market by 2024.

The Year Gone By

India’s international and domestic passenger traffic grew 16.52% in FY17-18 and reached a whopping 308.75 million. This is a considerably higher growth rate than what we’ve achieved over the past decade, with the CAGR remaining below 13% during FY06-FY18.

Looking at just domestic passenger traffic, we see growth of 18.28% in FY17-18 to reach 243 million, with international passenger traffic growth of 10.43% to reach 65.48 million.

With these figures, India boasted the world’s fastest growing domestic aviation market for the third consecutive year in 2017, backed by economic and network expansion.

The Prospects

India’s domestic passenger traffic expected to grow to 293.28 million in FY20, while its international traffic is projected to rise to 76 million. India is expected to replace the UK as the world’s third largest aviation market by 2024.

But Not Everything is Rosy

While these figures call for some celebration, growth in the global aviation sector is expected to be restricted by the recent rise in protectionist measures. The latest report by the IATA (International Air Transport Association) already warns against “a significant negative impact” of these protectionist measures on the global aviation industry’s growth.

Protection and restrictions on trade will impact the two largest aviation markets – China and the US. And, this will result in fewer job additions than would be possible if there were no curbs to free trade. Here’s what IATA has to say, “Sliding into protectionist mode would risk 100 million jobs and US$5.5 trillion in economic output over the next 20 years.”

A Move in the Right Direction

India has already privatized the nation’s biggest aviation hubs, namely, the airports at Mumbai and New Delhi. Two major airports in south India have also been privatized – Bangalore and Hyderabad. Post privatization, there’s been an enormous improvement in scale, ambience, customer service and facilities, easing the complete air-travel experience.

Following the success of these initiatives, the Airports Authority of India (AAI) has decided to privatize 15 other airports across the country. These may include airports at Ahmedabad, Chennai, Jaipur, Kolkata and Lucknow.

As previously witnessed, we can expect the labor unions to hold huge protects. When will people understand that only privatization can provide more jobs, higher salaries and improved working conditions. The nearsightedness will lead to some near-term rallies, and one can only hope that the privatization plans are not hindered by these hiccups.

Despite all the progress, India’s aviation industry remains largely untapped, offering massive growth opportunities. There’s still too much government intervention and not enough flexibility for private players to truly leverage the market and prosper. More initiatives to welcome private players and foreign investment can pave the way for faster progress.