New Delhi [India], July 17 : India's aviation sector holds strong untapped potential, as the country accounts for only about 4 per cent of global air traffic despite having nearly 18 per cent of the world's population, according to a recent report by Jefferies.
The report highlighted that India is already the third-largest aviation market in the world by passenger volume, behind the United States and China.
However, with only approx. 4 per cent of global traffic, the sector is still underpenetrated when compared to the size of the population. Air travel per capita in India remains very low, indicating a huge opportunity for growth.
It stated "India ranks as the third-largest aviation market by passenger volume.....but still accounts for just ~4 per cent of global traffic, vs nearly 18 per cent of the world's population".
The report also mentioned that rising incomes, rapid urbanization, and ongoing investments in fleet expansion and airport infrastructure are expected to support sustained high single-digit to low double-digit growth in the industry.
The country's air connectivity indicators are improving, with the introduction of new domestic routes and expansion into more international markets, including direct overseas connections.
The report compared India's aviation industry with that of China to underline the growth opportunity. While China handles over 0.7 billion air passengers annually, India caters to just about 0.2 billion.
In terms of infrastructure, China has a fleet of over 4,000 aircraft and more than 250 airports, whereas India operates with around 850 aircraft and 150-160 airports.
China also benefits from an extensive high-speed rail network, which competes with air travel on many routes. India, in contrast, still relies heavily on traditional rail for long-distance travel, as it lacks a strong high-speed rail system.
Despite the positive outlook, the aviation sector in India faces several challenges. One of the major issues is the global aircraft shortage and supply-chain bottlenecks, which may delay new aircraft deliveries. High taxation on aviation turbine fuel (ATF) increases operational costs for airlines.
Additionally, recent geopolitical tensions have led to airspace restrictions, forcing airlines to take longer and more expensive routes. India also lacks a robust maintenance, repair, and overhaul (MRO) infrastructure, leading to a high dependence on foreign facilities.
Moreover, the recent Air India crash and the grounding of the new technology fleet have raised concerns, possibly affecting passenger sentiment and safety perceptions.
Despite these hurdles, the report suggested that India's aviation industry is on a strong growth path, with significant room to catch up with global benchmarks.
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