Some 5-6 years back the number of air passenger in India was roughly 5 millions, in 2011 the numbers of passengers were 51 millions, the demand for air travel is growing by roughly 20% and will continue to grow in coming decade, but still baring indigo every other domestic airline is running in loss. The story of Indian airlines and kingfisher is well known to everyone.
So what holds back Indian aviation from making profit?
Well there are number of reasons, first, world over the fuel cost(including taxes) is around 20 to 25% of operating cost, but in India it is around 50%, secondly, there has been steep reduction in airfare right from 2000, while the fuel prices has increased from that time, thirdly, the ground cost,(cost of airport and handling charges) are on rise, fourthly, major and profitable routes are intense competitive and price based competition is continues, fifthly, the funding cost for aviation sector is one of the highest in india.
Probably the most important need of the time is to open the aviation sector, because, the investment has to come from there, the techonology needs to come from the best international players. Swiss airlines was bleeding when it was saved by luftanza, similarily virgin Atlantic was saved by the investment made by Singapore airlines. Years back Singapore airlines proposed to invest in Indian airlines but the proposal was sidelined due to sectoral investment caps. FDI in domestic aviation sector would generate less controversy than what has been erupted by FDI in retail. Its right time to go for iot.
