Indian Air Traffic Growth Second Highest in 2011 after Brazil

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Apr. 10 – The International Air Transport Association (IATA) has just released data regarding the demand for domestic flights in 2011, with India growing at 12.3 percent last year, behind only Brazil’s growth rate of 17.9 percent.

The Indian results lagged behind the average YOY growth of 16.3 percent seen in recent years, however it still showed a strong performance given the weakness of the global economy. By comparison, air traffic expansion in China barely attained 5 percent growth last year, significantly down from 14.6 percent in 2010.

Indian domestic carriers filled some 75.4 percent of all seats, despite the fact that the Indian domestic industry is facing financial difficulties. These figures, however, are expected to increase international airlines’ interest in acquiring partial equity in Indian carriers, with relaxation of FDI into India’s aviation industry expected shortly.

The most recent global figures for February 2012 show that global traffic rose by 8.6 percent in passenger demand and 5.2 percent in cargo when compared to February last year, indicating a global recovery is underway.

The aviation sector remains fragile though, according to IATA’s Executive Director Tony Tyler. A rapid rise in oil prices, together with increased air passenger duties in the UK and EU, coupled with ill-conceived national policies, initiatives that over-regulate, and excessive tax burdens all restrain the aviation industry.

“This prevents it from being the catalyst for economic growth that it should be,” said Tyler.

Dezan Shira & Associates is a boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in India. For more information, please contact india@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.

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