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Aviation – India and the World: News and Views

India Stays the Fastest Growing Aviation Market: IATA

According to a recent Industry projection, and reported earlier, India is going to become the world's 3rd largest aviation market replacing the UK by 2026.
Indian Aviation is growing

December 3, 2015.
Geneva-based IATA representing nearly 260 airlines and comprising 83% of global air traffic has confirmed this. In a statement it revealed the global air traffic statistics, and it has mentioned that India is currently the world's ninth biggest market. It posted 17.6 per cent growth  as against 12.8 per cent by China and 10.3 per cent by Russia. It has also said that the world air traffic, grew 7.5 per cent year-on-year in the month of October. During this period, the total capacity measured in available seat kilo meters (ASKs) rose 5.7 per cent while flight occupancy was up 1.4 per cent to 80.5 per cent.

"The air travel story is generally a good one. There are some weak spots. For example, the Brazilian air transport sector is caught in perfect storm of a deepening recession, high costs and a weak currency. In most parts of the world, we see strong demand for travel – exceeding the growth in capacity. Load factors are averaging over 80% and consumers are the big winners with fares trending downwards," said Tony Tyler, IATA's director general and CEO.

As compared to major aviation markets like Brazil, Australia, Russia and China India has registered higher jump in capacity expansion as well as passenger traffic. Most of the Indian carriers like IndiGo, SpiceJet and Jet Airways have aggressive fleet induction plan in place; even carriers from the Gulf are also keen for equity participation. As reported earlier, Spicejet is the World's Top-performing Airline. The air traffic picture in India looks rosy at present and is expected to grow on speculated lines in future too.

Tony Tyler, IATA's director general and CEO.

The global trade body disclosed in the statement more facts and figures -
  • Growth in air travel has been stimulated by lower fares, particularly for leisure travel. 
  • Data for the first eight months of the year show a 5 per cent fall in average fares in currency-adjusted terms. 
  • The fall in fares has supported approximately 3 percentage points of the rise in traffic year-to-date
  • India, China and Russia have reported growth in double digits
  • India continues to record very strong growth, up 17.6%, 
  • There is an increasing disparity in the pace at which India's domestic passenger growth is happening as compared to several other countries.
  • In most parts of the world there is a strong demand for travel—exceeding the growth in capacity. Load factors are averaging over 80 per cent
  • Consumers are the big winners with fares trending downwards 
  • Three major economies of Asia comprising India, China and Japan together count for 44% of the region's operations.
  • Brazil and Australia have shown a negative growth,
  • Australia saw slump in its domestic aviation growth at -0.7% in comparison to October 2014, while Brazil too showed a similar downfall of -6%.

"The Brazil's domestic traffic fell as the domestic aviation sector struggled under the burden of a deepening recession, sinking local currency and government policies that imposed crushing costs on the industry, while in Australia, there are signs of improvements in the economy with business activity increasing over recent months, but income growth remains relatively subdued and the trend in domestic air travel remains weak." said the IATA report.

The crowds keep coming
India's growth is seen in marked increases in service frequencies as well as ongoing economic strength. Supportive monetary policy is expected to help economic growth and that should help to sustain the very strong growth seen so far this year. One of the key factors that have supported double-digit growth in air traffic in India, the key aviation market in Asia-Pacific region, is the significant fall in the price of aviation turbine fuel (ATF). This has resulted into lower operating cost for airlines and therefore lowering of airfares.

ATF or jetfuel accounts for nearly 35-45 per cent of an airline's operating cost. Since September last year jetfuel price has fallen nearly 36 per cent to Rs 44.32 per litre (as per price charged by IOCL in Delhi).