Wind Beneath India’s Wings

IATA’s new report projects India as the third largest aviation market by 2025

Aditya Kakkar

The world needs to prepare for a doubling of passengers in the next 20 years with connectivity and sustainability being key drivers.

Wind Beneath India’s Wings

India is set to become the third largest aviation market one year earlier than originally expected, the International Air Transport Association (IATA) said in a report on October 24. IATA, which represents about 85 per cent of the global airline traffic, projects India to overtake the UK to become the third largest air passenger market by 2025. China will be the top market, followed by the US. In a similar report last year, IATA had projected India to overtake the UK by 2026.

By 2036, India will have about 478 million airline passenger traffic, which will be more than that of Japan (just under 225 million) and Germany (just over 200 million) combined. India’s current passenger traffic is about 141 million. The most critical number will be the doubling of overall passenger traffic globally from 4 billion to nearly 7.8 billion passengers in 2036 on a 3.6 per cent compound annual growth rate (CAGR).

“All indicators lead to growing demand for global connectivity. The world needs to prepare for a doubling of passengers in the next 20 years. It’s fantastic news for innovation and prosperity, which is driven by air links. It is also a huge challenge for governments and industry to ensure we can successfully meet this essential demand,” said IATA’s director general and chief executive officer, Alexandre de Juniac. Indian airlines have over 800 planes on order and in the next five years alone are set to add 350-400 aircraft. All Indian airlines put together have a fleet of around 500 aircraft currently.

The role of India's civil aviation ministry cannot be underscored which has actively incorporated industry inputs in formulating new guidelines and policies. The ministry has acceded to a request from some airlines that will allow them to potentially ply bigger aircraft for UDAN flights and also be more flexible in how they integrate such routes into their overall operations.

UDAN is a regional aviation scheme that encourages airlines to fly to underserved airports at low fares. The airlines have to sell a certain number of seats (between nine and 40 currently) on such flights at a maximum of Rs 2,500 per hour of flying. In return, they receive a subsidy from the government. The changes agreed to by the ministry were prompted by the need for airlines to have greater network and commercial flexibility. This was provided for in the new bidding round that started last month. One change is that airlines can now make the UDAN destination part of a connecting flight. To make sure that the purpose of connectivity is not diluted, the airline will have to declare 70 per cent of seats on any such flight as UDAN seats irrespective of the kind of aircraft they are using. They will, however, only be paid subsidy for a maximum of 40 seats. Mostly airlines use small 70-seater planes for regional flights but some underserved airports can also handle bigger aircraft such as the Airbus A320 and Boeing 737.

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