Domestic air traffic is growing at whopping 20%
HYDERABAD The airline landscape in India has transformed radically in recent years with domestic air traffic posting a whopping 20 per cent plus growth during Jan-Dec 2015, the highest in the world, with airports growing fast.
However, it is disappointing that 72 per cent of this traffic is restricted to just the top ten airports, reports Moneycontrol. While national carrier Air India and private major Jet Airways fly to 50 out of 125 domestic airports, current market leader Indigo and SpiceJet fly to only around 34 apiece.
A key reason for the poor regional connectivity is the airlines’ high fixed costs, which call for high traffic volumes to spread the cost and make fares affordable, points out a background paper on the aviation industry jointly released by Federation of Indian Chambers of Commerce (FICCI), Ministry of Civil Aviation and KPMG.
This highlights the immediate need for state-level initiatives and providing airlines with huge tax breaks and cash subsidies to make newer routes viable to connect India’s interiors.
The note also points out that there are about 450 used/un-used/abandoned airports and airstrips spread across the country, of which about 225 are owned by state governments or private operators.
Efforts must be undertaken to activate these airports, subject to their long-term financial viability, the note says. Although a Regional Connectivity Scheme and fund have been under government consideration for a while now, there is likely to be resistance from airline companies given the intervention and price controls