India’s Aviation Industry – Moving On

By Vikram Sehgal

Indian aviation industry was, until recently, one of the fastest growing aviation industries in the world. Passenger traffic was doubling every two years, new airports were opening across the country, and Low Cost Carriers were offering tickets at throwaway prices. The party may not be over, but there is certainly a lull. A vibrant and a thriving sector, India’s aviation industry has seen its fortunes tumble in recent years due to over-expansion, high cost of fuel, and cut-throat competition. Its financial losses for the fiscal year ending March 2009 were nearly double from last year to US$1.75 billion. Jet Airways had operating losses of $268 million, and Air India lost more than $800 million. Kingfisher Chairman Vijay Mallya funded his airline's losses from the profits of United Breweries, his beer and liquor empire. But the no-frills Indigo Airlines bucked the falling passenger trend, and it could well be the model for future growth. Globally, the aviation industry suffered a loss of US$8.5 billion - of which India’s share was 20%! – while its share of world air traffic is only 2%.

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