Opinion | From cautious optimism to recovery in 2021
2020 has been an extremely difficult year for the industry with plummeting passenger volumes and unprecedented losses. We are steadily moving towards recovery, but a definitive prediction of the exact shape of revival of air traffic seems difficult. Therefore, it is better to extend the time horizon a little and discuss the longer-term outlook for Indian aviation.
India has an extraordinary story – a high growth economy coupled with low air travel penetration. India’s GDP is forecast to grow anywhere between 6 and 8 percent, a major chunk of which is expected to come from India’s middle class. Despite this, India remains one of the least penetrated markets for airline travel with only 5 percent of citizens acquainted with air travel. India’s diverse geography, internal migration, and strong family ties, coupled with growth in income, will drive a sharp growth in air travel in years to come.
The aviation environment in India has been tough for years, with one of the highest cost structures in the world, owing to high taxes and a steady erosion in the rupee dollar exchange rate. This has resulted in continuous upward pressure on fuel, maintenance, and leasing costs.
