Increase in disposable incomes, fall in prices of jet fuel and increase in tourism due to visa reforms and better marketing of Brand India could propel the country to become the third largest aviation market by 2020, and largest by 2030, a new report said on Thursday.
The FICCI-KPMG ‘India Aviation Report 2016’ said with 81 million trips, India’s domestic aviation market grew at 20.3% in 2015 — the highest growth rate recorded in the world.
“India is well on its way to become the third largest aviation market by 2020,” the report said, adding that aspects such as increasing disposable incomes, fall in prices of Aircraft Turbine Fuel (ATF), increase in tourism and visa reforms have placed India in a unique position.
“This is bringing the country closer to achieving its vision of becoming the largest aviation market by 2030,” the report added.
The Indian civil aviation sector has exhibited “tremendous resilience to global economic slowdown” and ranks ninth in the global civil aviation market, the report said, attributing this largely to the growing economy, increased competition among airlines, especially among low-cost carriers, modern airports, greater use of technology, Foreign Direct Investment (FDI) and increased emphasis on regional connectivity.
However, the report warned that the civil aviation sector is hugely susceptible to oil price volatility, economic cycles, natural disasters, epidemics and political upheavals.
100% FDI in airlines sector
The report also supported an open sky policy and pitched for 100% FDI in airlines sector. It also urged the government to put in place the proposed civil aviation policy at the earliest and resolve the vexed issue of international flying norms for local carriers.
Amber Dubey, Partner and India Head of Aerospace and Defence, KPMG said, “The positive impact of Civil Aviation Policy 2016, rise in disposable incomes and the fall in ATF prices are likely to help India leapfrog into the top three of the world. One hopes that the government can match domestic ATF prices with global levels for a three year experimental period.”
