Experts bullish on aviation in India

Written by Surabhi Agarwal | Shaheen Mansuri | New Delhi, Mumbai, Nov 4 | Updated: Nov 5 2008, 07:02am hrs
Although the global economic downturn has prompted many companies to trim business travel expenses, analysts remain bullish on the outlook for the travel industry. They expect robust growth with a rationalisation in capacity. The Indian aviation sector, on the other hand, has the capacity to absorb multiple players despite the slump, say airline experts.

"The present dip in travel numbers across the board is a result of companies hitting the panic button. They will soon realise that they will have to go out and get business," said Manoj Chacko, head and VP, business travel, Amercian Express.

According to a business travel report released by American Express, the increase in domestic airfares in the year 2009 could range -3% to 3%. On the other hand, international air fares are expected to remain the same or see a marginal increase of up to 3%.

The variation in air fares for India is lower than the average increase of 2-4% in rates for domestic air travel in the APAC region, as well as increase of 5-7% in international air fares.

"This is on account of the excess capacity that had come into being over the last couple of years. Carriers will, to an extent, play with price points to stimulate demand," said Chacko.

Meanwhile, Atlanta based Delta Air Lines opines that India has the capacity to absorb multiple players in the aviation sector, even as the global aviation sector under-performs.

Frank Jahangir, vice-president (sales), Europe, Middle East, Africa and India, at Delta told FE, "The Indian aviation sector has seen a cycle of boom and bust.Yet we see a growth of 6% annually because business travellers still go to various destinations in the US." He further said that although Indian players like Jet Airways and Kingfisher Airlines are flying internationally, it will not have any cascading effect on Delta's operations into India. The airline launched its maiden non-stop flight from Mumbai to Atlanta on Tuesday.

"We have the right kind of aircraft for the right kind of market. Even our air fares are competitive," said Jahangir.

The reason for India being the centre stage for Delta is mutli-fold, say aviation experts. The first is that fuel prices have gone down. Also, experts reckon that as other airlines are cut capacity, Delta could find a viable option to lure travellers on the Mumbai-Atlanta route.