April 4th, 2011
09:35 AM GMT
Share this on:

India’s aviation industry is taking off again. Between 2009 and 2010 domestic passenger traffic grew 19% - an impressive figure considering the 2008 global financial meltdown that led airlines around the world, including those in India, to ask for government bailouts.

“I have never seen such a dramatic change in the market character in such a short span of time,” analyst Kapil Kaul, who runs the Center for Asia Pacific Aviation, said.

He notes that less than 2% of India’s 1.2 billion population travels by air, which points to massive potential for growth.
 
“We’ve not even started. We could see potentially at least three to five decades of very high and profitable growth,” Kaul said.

Over the last five years, the industry has expanded, but it hasn’t been profitable, he said. But he thinks that will change and foresees a future of sustainable growth and profit making. 

So far the big winners have been the low-cost carriers.

One of the newest to take off in India has been 5-year-old no-frills carrier IndiGo, which has climbed to the top of the pack.

Its kitschy advertisements, reputation for good customer service and low fares are making a mark on the industry.

The  financial meltdown took a heavy toll on the global aviation business. But the Indian industry didn’t experience a “dramatic fall,” said IndiGo President Aditya Ghosh. "In the worst year in the aviation business ever India only dipped 5%,” he told CNN. “Now in that same year we grew by 46% in India. IndiGo grew by 46%.”

How did IndiGo manage that? One factor is that “we kept consistently bringing aircraft in,” Ghosh said.

IndiGo Airlines made history this year with the single largest aircraft deal in global history. The company made an order for 180 aircraft worth more than $15 billion. 

IndiGo will need those planes if it continues to grow the way it has. This year the Indian government gave the company the go-ahead to start international service. Airlines in India are required to operate in the country for five years before being allowed to start flying internationally.

But growth certainly has its limits in India, where airlines contend with some of the world’s highest fuel taxes, insufficient infrastructure and a massive bureaucracy.

“While we were constructing this airport, we had to contend with 58 government departments. During this period, we had to contend with 100 court cases to take care of encroachments in this area,” said Aniruddha Ganguly.

Ganguly is the group head of business integration for GMR Group, the company that built Delhi Airport’s new $1.3 billion Terminal 3. He says the terminal was built on time despite the roadblocks.

“I would say that the country over the years has learnt the art of overcoming obstacles,” Ganguly said.

IndiGo’s Ghosh says the opportunities outweigh the challenges.

“Either I could work in another part of the world where fuel taxes are low and there are more efficiencies in some sectors but there is hardly any growth, or work in India where there is a 15% to 20% growth in passenger numbers every year and for the foreseeable future.”

Analysts say in the next decade India will need three times the number of airports that it has today. Since it doesn’t have enough skilled labor to build them or pilots to fly the planes, people with the right skills in developed nations with wilting economies may want to look east for opportunities.

Posted by: ,
Filed under: Air industryAsiaBusinessIndia


soundoff (25 Responses)
  1. Acropolis

    Money and energy might be better spent on food & healthcare. There is no lasting future on aviation.

    April 4, 2011 at 10:45 am |
  2. sunmola Atinuke Taibat

    Well its good for Indian economy.

    April 4, 2011 at 11:59 am |
  3. Daniar of Kazakhstan

    I once flew with spicejet and kingfisher, both were very nice

    April 4, 2011 at 12:28 pm |
  4. solomon

    Fat chance that I would EVER get on one of India's "low-cost" airlines. I would rather pay full fair and at least have a chance of staying alive!

    April 4, 2011 at 1:58 pm |
  5. AB

    @Solomon Better fly the American low cost ones like SouthWest, huh?

    April 4, 2011 at 5:41 pm |
  6. AB

    @Solomon Better not even go to our third world country that is so far beneath you. Just stay in America. With Obama, Putin, Sarkozy, Cameron and Jiabao going to India, I can assure you that you wont be missed.

    April 4, 2011 at 5:43 pm |
  7. MannyHM

    Progress in air travel is good however high speed trains (even slower ones) are better with more scenery and time for reflection.

    April 4, 2011 at 6:42 pm |
  8. Tom

    I think you meant "boon" – I wouldn't use the word "boom" in the headline about any airlines.

    April 4, 2011 at 7:14 pm |
  9. Robin

    @ Solomon,

    GO ahead.. get on your Southwest airlines then lol

    April 4, 2011 at 8:39 pm |
  10. sameer22

    INDIAN ECONOMY IS ALREADY BOOMING. FORGET THE THIRD WORLD COUNTRY, INDIA WILL BE ONE OF THE WORLDS LEADING COUNTRIES VERY SOON.

    April 4, 2011 at 9:00 pm |
  11. Mangoose

    @solomon -Your best chance of staying alive is by NOT stepping outside your home, $tupid !!!!

    April 4, 2011 at 9:36 pm |
  12. sebunian

    pilots paying for licences with as little as 50 hours flying time under there belts flying commercial jets ? this country is a joke

    April 5, 2011 at 1:01 am |
  13. Reality

    Really, Indian airlines have one of these best history, when it comes to people dying in air crashes. So I am not sure why you think you might die.

    April 5, 2011 at 3:13 am |
  14. Spicy fart

    Yeah, if 500 people die in an Indian airline crash, the statistic will be so nominal compared to India's mammoth sized population that India will ruled the safest air travel country in the whole world. Then, watch the people take to the sky like sheep. I guess I would take Biryani-Airlines for $49 as opposed to Aloo-Chana-Airlines for $59 - thank you very much.

    April 5, 2011 at 4:40 am |
  15. Arun

    I have travelled in these low cost as well as the so called premier airlines. Services, facilities will differ for sure but how does that matter – Are you flying to use the services or reach the destination safe and on time? A look at the history of air crashes and you would hardly hear about low cost airlines. I seriously doubt if anyone understood the purpose of the article. India is still a third world country for most of the developed nations but you may wanna ask your leaders about what they think of India.

    April 5, 2011 at 9:27 pm |
  16. Vishnu Singireddy

    India's strenghth is it's population and people. That to very young dynamic and Hard working ..Future is India's ..No doubt about it ...

    April 7, 2011 at 3:30 pm |
  17. SRI

    INDIA AS YOUNGEST POPULATION IN THE WORLD. 50% OF INDIAN POPULATION IS AGE 25 AND BELOW AND 75% AGE 35 AND BELOW. INDIA IS THE FUTURE......GO INDIA AND INDIANS GO. SKY IS THE LIMIT FOR YOUTH OF INDIA.

    EDUCATION IS THE KEY AND PATH FOR THE SUCCESS. STRONG EDUCATION IN MATH AND SCIENCE IS KEY. TEACH ALSO LEADERSHIP & MANAGEMENT SKILLS, BUSINESS AND ENTERPRUNER SKILLS AT ALL SCHOOLS IN INDIA FROM CLASS I AND AT VERY YOUNG AGE. TURN THE INDIAN YOUTH INTO FUTURE BUSINESS OWNERS AND BILLIONAIRES CREATING MORE FUTURE EMPLOYMENT IN INDIA. INVEST HEAVILY IN R&D ESPECIALLY BIO-TECHNOLOGY, PHARMACY, NANO-TECHNOLOGY, AND GREEN ENERGY WHICH AS HUGE POTENTIAL FOR INDIA AND STRONG FUTURE.

    I REQUEST ALL INDIAN NRI's TO COME BACK TO YOUR MOTHERLAND AND CONTRIBUTE AND BECOME PART OF THE INDIA'S SUCCESS STORY IN THE 21ST CENTURY. 21ST CENTURY BELONGS TO INDIA AND CHINA. I AM ONE OF THE INDIAN NRI LIVNG IN USA FOR 14 YEARS IS GOING BACK TO INDIA FOR GOOD IN 2011. INDIA IS THE FUTURE.

    JAI HOO INDIA. JAI HIND. BHARAT MATA KI JAI. VANDAMATERAM

    April 8, 2011 at 3:29 pm |
  18. Alan tarkenton

    Here is why this story is at least a little garbage:

    "An unprecedented trust deficit looms large in Indian skies with the sudden spate of fake pilots, both commanders and co-pilots, being detected."

    Full article: http://timesofindia.indiatimes.com/india/Fear-in-the-air-Flying-on-a-wing-and-a-prayer/articleshow/7938913.cms

    It looks like CNN has been instructed to prime the American public to side with the Tiger (India) over the Dragon (China). India gets a whole section to inform Americans just how nice India is, meanwhile China gets further villainized. Within 10 years the American public will come to view China as a terror to the world, much as they viewed Russia. CNN will have most certainly played their role to a 'T'.

    April 11, 2011 at 8:26 am |
  19. Alan tarkenton

    "Reality
    Really, Indian airlines have one of these best history, when it comes to people dying in air crashes. So I am not sure why you think you might die."

    ... it's comments like these that infuriate me. all it would take is just a little teeny tiny bit of research and this guy could actually know what he is talking about, instead of blathering garbage.

    April 11, 2011 at 8:28 am |
  20. Mike

    Sorry, anytime I read about India's airline industry I keep going back to a several months ago when the flight crew (ie; pilot, co-pilot, etc) left the cabin to argue with the flight attendents over the virtue of one of the female flight attendents. Yes, I know that they usually have the aircraft on auto, but at least you have the comfort of knowing that the pilots are there should something happen. This wasn't the case though with the India Airlines flight from Dubai that day....

    April 11, 2011 at 10:05 am |
  21. Amit-Atlanta-USa

    CNN – PLEASE NOTE!

    Ask your correspondent to correct the heading – it must read "AIRLINE INDUSTRY" and NOT "AVIATION INDUSTRY".

    Being of Indian origin myself, I am proud of my former homeland's airline industry, but am also ashamed of our aviation industry. It's all noise and no results!

    Amit-Atlanta-USA

    April 14, 2011 at 5:44 pm |
  22. Abdul kahar m

    Its the very glad news to the aviation students.

    June 26, 2011 at 9:11 am |
  23. anabolics steroids online

    Such informative web site! Large thanks! Thanks for a good time visiting business.blogs.cnn.com . It is really a pleasure understanding a web site like this filled with nice information. Thanks!

    December 2, 2011 at 1:12 am |
  24. hotel hanoi

    I am now not positive the place you are getting your info, but great topic. I needs to spend some time learning more or working out more. Thanks for wonderful information I used to be in search of this info for my mission.

    September 21, 2012 at 10:43 am |
  25. ready made website

    I'm no longer certain the place you're getting your info, however good topic. I needs to spend a while finding out more or figuring out more. Thanks for wonderful info I used to be in search of this info for my mission.

    November 6, 2012 at 7:17 pm |

Post a comment


 

CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

About Business 360

CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.

 
 
Powered by WordPress.com VIP