Indian Aviation Minister Praful Patel said on May 04, he expected the country's newly regulated airline sector to boom 20 percent annually over the next five years on the back of surging investment and traffic. Domestic and international passenger traffic would grow 20 percent a year as the government and private sector invest $20 billion over the five years, including more than doubling the number of civilian passenger planes to 400, he told Reuters. "India's aviation sector has remained for far too long a very small sector, a very restricted sector," Patel said while travelling in his car to meet Finance Minister P. Chidambaram.
"Though the country has progressed, we have made huge strides in various sectors but the aviation sector has not made proportionate development."
After years of crippling red tape, poor infrastructure and high costs, India is throwing open the sector to new carriers at home and abroad, deregulating routes, increasing traffic, developing its airports and modernising its fleets.
Patel said the communist-backed government would push ahead with plans to sell up to 25 percent of Air-India and Indian Airlines in 2005/06 (April-March) to help fund expansion in the face of growing competition, but would not privatise them.
"We will strengthen them, we will give them newer aircraft, more numbers and simultaneously we will also allow the private sector to come in a bigger way," he said.
"That's the reason why you see a whole load of new airlines which are now taking to the Indian skies."
His comments came a week after Air-India approved the long-awaited purchase of up to 50 long-range planes from Boeing Co worth about $7 billion in a deal that has drawn public protest from European rival Airbus.
BOEING and AIRBUS BICKER: Patel would not be drawn, saying only: "I think this is a universal phenomena of two rivals fighting with each other."
Airbus alleged some irregularities in the process, but Patel said the Boeing purchase would not be derailed by the row.
Patel also said India was pushing ahead with more bilateral agreements to increase international routes, including with Singapore, Hong Kong, the Netherlands and Belgium.
New Delhi last month signed breakthrough deals with the lucrative United States and United Kingdom markets, doubling capacity to and from the UK and opening skies with the United States.
India has also agreed to liberalise traffic with China. The two nations account for almost 40 percent of the world's people.
Underlining India's potential, Patel said the country had about 180 civilian passenger planes, compared with 750 in China and more than 6,000 in the United States.
Patel said he was confident the government would further reduce taxes on aviation fuel over the next year or so to help bring down prices and make the sector more competitive.
Less than one percent of India's more than one billion people fly each year, with tens of millions relying on cheaper, but outdated trains and road networks.
But competition, a flurry of new cut-price airlines and tax cuts in the sector have brought fares down dramatically - in some cases rivalling trains - and brought flying within reach of millions more people. Spending power is also surging in Asia's fourth largest economy.
Patel - 48-year-old founder and head of a business empire spanning home-made cigarettes, edible oils and health care - is confident the coalition's allies who support it from outside can be swayed for the part sale of the struggling state carriers.
"We'll take their views and try to bring some kind of balance," he said. "We want better valuation and more money to fund expansion plans."
India's average annual air travel is 0.1 trip per person, a fraction of the global average of 2.0, industry figures show.
The latest entrant into the Indian market, Kingfisher Airlines, backed by the world's second largest spirits maker, India's UB Group, is due to take off this week.
Limited advance purchase tickets between major cities now sell for as little as just over $10 each way.
India's leading domestic carrier, Jet Airways Ltd, which has begun flying overseas, recently raised $435 million in an initial public offering, that was heavily oversubscribed and the stock listed at a premium to the offer price.
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