Indian airlines soar but experts warn of turbulence ahead, Latest Business News - The New Paper

Indian airlines soar but experts warn of turbulence ahead

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NEW DELHI A recent major acquisition by Indian budget airline SpiceJet underscored the vast potential of the world's fastest-growing aviation market, but experts say woefully inadequate infrastructure and high operating costs could threaten the industry's rapid expansion.

India's burgeoning middle classes are taking to the skies in ever greater numbers, with passenger growth of 20 per cent in 2015, according to industry body IATA - nearly double China's 11 per cent increase over the same period.

Low-cost airlines are rushing to expand their fleets to take advantage of that growth, encouraged by a fall in fuel prices that last year pushed several private operators into profit for the first time.

SpiceJet, India's fourth biggest airline with a 13 per cent market share, said last Friday it was buying up to 205 Boeing planes worth $22 billion (S$31 billion) to fuel a major expansion of its domestic operations.

Experts warn that India's rickety infrastructure could hold back future growth, with just 90 of the country's more than 460 airports currently operational.

"Consistent 20 per cent-plus growth per se is not a cause for celebration if the institutional framework is weak," said Mr Kapil Kaul, South Asia head of industry advisory and research firm CAPA.

"This only increases safety and security risks. And skill shortages are also emerging. An urgent fix is required."

CAPA has warned that India could face a capacity crisis unless it builds 50 new airports over the next decade.

To avoid that, the government is trying to revive some of the hundreds of disused regional airports - among them a number of "ghost airports" that were built by the government but never used.

In 2015 the government announced a plan to make air travel affordable for millions more Indians, reviving struggling airports and connecting rural areas.- AFP