India's domestic aviation market registers fastest growth in five years amid infra challenges, says IATA

Geneva: India's air connectivity has grown the fastest in the last five years and there is "strong growth" ahead in terms of domestic passenger numbers though there are infrastructure challenges, according to global airlines' body International Airport Transport Association (IATA).

India is the fastest growing domestic aviation market in the world, IATA's chief economist Brian Pearce said. The country registered double-digit growth in domestic aviation market for the 50th consecutive month in October.

An analysis by the IATA showed that air connectivity grew the fastest at 114 percent in the five-year period from 2013-2018.

Representational image. Reuters.

Representational image. Reuters.

"Many of the markets where connectivity has grown fastest, unsurprisingly are in Asia — India (114 percent), China and Indonesia...," the grouping said in a presentation during the Global Media Day here.

As per the IATA, which is a grouping of around 290 airlines, connectivity is the "extent to which a country is integrated into the global air transport network".

In recent years, many foreign as well as Indian carriers have commenced flights to and from various Indian cities. About domestic passenger growth, Pearce told PTI that there is strong growth ahead but the challenge is with infrastructure and that airports are crowded.

"We need more terminals and runway capacities... We have seen concession (agreements) for many airports leading to large rises in airport charges," he noted.

On steps being taken in India to address the infrastructure issues, he said additional capacity is being put in place and some very good modern airports being built which is a "real positive".

Noting that the cost of using those airports is high, Pearce said it is because the "economic regulations have not been strong as we would have hoped because concession agreements were made with very large royalties".

The lesson for the future is to provide good infrastructure because more is needed but at an affordable rate, he noted.

IATA's director (global airport infrastructure and fuel) Hemant Mistry said historically airport concessions have suffered from "unduly long and arbitrary concession lengths — these can be for the benefit of the government (higher concession fee) and the concessionaire (longer term returns).   "We have seen many examples of very high concession fees where a large proportion of the gross revenue of the airport is diverted to the government and not necessarily re-invested back into aviation," he added.

According to him, there are also examples where concessions are negotiated with fixed pricing over the concession term, which risks a situation where charges are not reflective of the service or infrastructure provided to the airlines and passengers.

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Updated Date: Dec 12, 2018 18:46:04 IST