India Set To Become Third Largest Aviation Market In Next 20 Years

India is set to become the third largest aviation market in the next twenty years by adding 266 million passengers, thus taking over the United Kingdom.

“Currently the ninth largest market, India will see a total of 367 million passengers by 2034, an extra 266 million annual passengers compared to today. It is an exciting prospect to think that in the next 20 years, more than twice as many passengers as today will have the chance to fly,” said Tony Tyler, director general and CEO of International Air Transport Association (IATA).

He added, “Air connectivity on this scale will help transform economic opportunities for millions of people. At present, aviation helps sustain 58 million jobs and $2.4 trillion in economic activity. In 20 years’ time we can expect the global aviation to be supporting around 105 million jobs and $6 trillion in GDP”.

According to the findings of IATA, the Indian domestic aviation market is pegged to grow at 6.9% while adding 159 million extra passengers on its domestic routes.

At the 10^th Indo-US Economic Summit organized by Indo America Chambers of Commerce, experts suggested that the aviation industry in India could also further cement ties between the two countries. However, for this to be achieved, India will have to overcome several challenges.

“Concession agreements for airports being in the nascent stage are plagued with issues pertaining to provisions relating to delay, change in law termination due to default, role of regulatory authorities and dispute resolution. It is hoped that with the passage of time, the government will address these issues,” said Dr. Lalit Bhasin, regional president of IACC.

Apart from these issues, the aviation industry is marred by high airport costs, which resulted in several international airlines reducing their frequency of flights from the airports. “Delhi and Mumbai airports are running high on costs, which is being recovered from the carriers. This is not good as the carriers are already paying off higher taxes on aviation turbine fuel (ATF),” said Amber Dubey, Head and Partner, Aerospace and Defence, KPMG at the event.

Besides, the industry is also facing shortage of trained aviation specialists. “Should that not be the case, India’s status among countries in the aviation scheme could be downgraded and there would be restrictions on the ability of Indian carriers to add flights to international destinations,” added Bhasin.