Air travel @ 99 paisa! Sounds in- credible? True indeed! SpiceJet, the fastest growing and the most efficient low-frills airline, is offering flight tickets at an unbelievable price across 14 destinations, with 84 daily flights. In fact, the onset of private airlines has now changed air travel from a luxury drive to an affordable middle-class journey. However, the industry is unable to meet the growing air traffic against the strong civil aviation growth rate at 20% per year, the highest in the world. Though the metro traffic is saturating, the demand for more airlines from a handful of fast-growing smaller cities is picking up. Against this backdrop, many airlines are bulking up on capacity as well. In the recent past, Indian air carriers placed orders for about 400 aircraft worth $15 bn. However, surprisingly, all is not that rosy and the good news is marred by a looming overcapacity and competitive pressures. Most airlines are confronting losses.
Investments in non-metropolitan regions have brought in new demand for air services. Higher disposable incomes have made the situations at airports almost similar to what they were a few years earlier at railway stations. Until last year, only 0.01% of the Indian population used air transport, with 150 large jets and seven large domestic airlines carrying around 100 passengers each. "The opening up of the skies had led to similar boom situations in other markets, like the US in the 1980s and Europe in the 1990s," says Dinesh Keskar, Vice-President of sales at Boeing. Since April 2005, the industry has not only witnessed the arrival of 120 new aircrafts, but also an increase in the seating capacity of 1,00,000 in September 2006 from 12,000 by December 2005. |
