Indian airline CEOs optimistic about future growth

A snap poll taken by industry lobbyists, the Federation of Indian Airlines (FIA), brings out optimism among Indian airline chief executives regarding the industry''s growth story. A major highlight of the poll is their belief that growth would continue to be strong, even in the long term, perhaps as much as by 20%, for both passenger and cargo traffic. Though concerned about constraints, they also felt that infrastructure at airports would improve in the medium term despite growing traffic.

According to the survey, about 61% CEOs felt that the passenger traffic would increase 20% to 30% over the coming year. Almost half of the CEOs also felt that cargo traffic would grow in the range of 10% to 20% in the coming six months.

There was concern expressed by some about over-capacity, which they perceive as a major threat to the health of the industry.

An interesting observation made by the CEOs was that the government should allow multiple airports in major cities, and that existing airports ought to continue in service, particularly in cities such as Bangalore and Hyderabad.

Higher tax on aviation turbine fuel (ATF) is another constraint, as fuel cost contributes more than 30% to the operational cost of an airline. At Rs39,768 per kilolitre, ATF price in India rules about 75% higher than at the international level.