Opening of Indian skies and successful positioning campaign with "Incredible India branding has openup many new markets for India. Though late, it is good that the decision makers have put priority to aviation sector as major vehicle for tourism development. Nodoubt, airport transport is a driver of economic development. The economic stimuli of airlines, airports and their direct affiliates beyond their direct impact can be judged with the multiplies of job and that too involving other industries. During the last two years, liberalized civil aviation policy made radical changes in the aviation sector with varied opportunities.
In India GDP growth in the period between 1995-2004 was averaging to 6.21% where as annual average increase in domestic and international travel has been 11.2% and 8.7% respectively and since than GDP growth is progressively (BRIC (Brazil Russia India China) report of M/s. Goldmanasch) has predicted India will be amongst the foremost growth centres of the world by 2020.
The demand for air transport is rising and growing number of airlines in India for domestic sectors and even request for additional traffic rights to India are the right indicative to the demand segment and only such airline activity is the most essential to sustain the economic growth.
With rising incomes, domestic sector has seen boom and new airlines are coming every moth. Indus Air, the tenth domestic airlines in India finally look off starting operation from Delhi & Mumbai to Chandigarh begin with, giving air connection to many new destinations within India, recent news about the finance Ministry's consideration a proposal to allow domestic airlines to hedge aviation turban fuels (ATF) has boosted further the aviation sector. Currently carriers are allowed to hedge ATF for international flights; they are not allowed to do so for domestic operations. Since fuel accounts for 40% of the total cost, an airlines now feel confident that the
move will allow them to stablise costs and check losses. Also in another major step taken which is very positive for the civil aviation sector is about private operators of international airports in India will now have the right to decide which company would supply aviation turbine fuel to airlines in their respective airports. Until recently this was decided by the Airports Authority of India, (AAI) but the Government has decided it should have no role in restricting the market. The move is expected to spark fierce competition from private operators like Reliance, Essar and Shell.
In the aviation sector the merger of Indian and Air India is a positive development. Both the airlines are now looking into final details like Branding and HR issues primarily. It appears post merger, there will be one full service airline and one low cost arm with higher levels of air transport activity and relatively higher level of disposable per capita income will made this national airline more competitive and more revenue generating for the country.
In has to be seen from other angle also which is about the spreading the wings at many international routes where we could not utilize of our rights in full capacity based on bilaterals. Bilateral air traffic rights on international routes between India and other countries. These had been decided on the basis of reciprocity. The actual utilization of available rights on international sectors had remained heavily imbalanced - while the utilization of foreign airlines are over 60% whereas that of Air India/Indian airlines are around 40%. Hence there is loss of business and tourism growth too is restricted. The new policy imitative by Govt. of India have led to strengthening of Air India and Indian Airlines by acquisition of new aircrafts, improved operational synergy between these two airlines, allowing eligible Indian scheduled carriers to operate on international routes and to follow aggressively open Sky Policy without reciprocity contract as primary terms for operations.