India’s Domestic AIR Travel Market is Slowing Down

India’s Domestic AIR Travel Market is Slowing Down

Namratha Prasad

In August 2019, The International Air Transport Association (IATA) released figures that showed that India with 3.7% more domestic flyers over August 2018, had dropped to the fourth position behind China (10.1%), Russia (6%) and the US (3.9%) ToI. For almost four years previously, the Indian domestic aviation market had enjoyed double digit growth and was considered to be the world’s fastest growing market.

It was believed that that the deathly blow to the Indian aviation market had been dealt by the collapse of big players within a span of seven years, such as Kingfisher Airlines and Jet Airways, apart from the market exit of several smaller players. That meant that there were only two full-service carriers, namely, Air India and a relatively new airline called Vistara.

The key reasons for the failure of the various airlines were considered to be the high costs involved, primarily heavy infrastructure fees and rising fuel costs. Other reasons include depreciation of the Indian rupee and government intervention in the sector. In recent times, the sector was also negatively impacted by the deepening crisis in the Indian economy that was triggered by the fall in consumer demand. An industry executive opined that the air travel growth slowed down largely due to lower capacity expansion after the exit of Jet Airways.

Most airlines however were optimistic about the future and thought that there was a fundamental demand in the Indian market, especially outside the metros, which would fuel demand in the future. They believe that an increase in aircraft operated by the existing Indian airlines would lead to the return to double digit growth in the near future.

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