Thanks to the ever increasing spending power of middle and upper classes, the air passenger traffic in the country is likely to see 18% growth rate per annum in the next few years, believe experts. Bearing in mind the huge untapped potential in this sector, domestic carriers are augmenting their fleet size to cater to the growing demand. 

Indian carriers like Indigo, GoAir, Jet, Kingfisher and AirIndia are growing their fleet size and have placed huge orders with global aerospace vendors such as Airbus, Boeing and Bombardier in the recent past. The aircraft strength of Indian carriers stands at 430 aircraft, which is likely to increase to around 900-1,000 aircraft by 2020, say experts.

"The Indian civil aviation is on a consistent growth path. The traffic and cargo are growing at 18 per cent and 10 per cent per annum respectively. The same is expected to continue in the short and medium term," global advisory firm KPMG Director Amber Dubey said.

Independent Aviation Researcher Pran Dasan said Indian have become very "frugal", in terms of commercial air transport as of the expected 140 million air travellers this year, more than 98 million were repeat travellers.

Though the significant growth momentum in this sector is likely to result in intense competition among players, it is not likely to pave way for consolidation, but there will be "collaborations". "We may see some collaboration between airlines to avoid duplication on non-lucrative sectors. But consolidation among players is likely to be some time away," Dubey added.

Dasan believes "competition will be intense and I really don’t believe that consolidation is an answer or the way forward." There is also very deem prospects of air-fares coming down.

"Fares will not drop drastically even if competition increases and number of flights increase multifold. That is because of the prohibitive ancillary costs that plague the industry in India. Airlines will be forced to keep fuel and other surcharges high to cover their operational costs," Dasan said.

Dubey said, "We are not likely to see irrational price wars that end up bleeding the whole sector, like in FY'07 which ultimately led to the demise of certain airlines. DGCA is also watching not just over-pricing but also predatory under-pricing which is deemed as ‘anti-competition’."

PTI