Navigating the cloudy horizon

Economies outside North America and Europe are expected to lead the world in GDP growth. But airlines in India have a stiff challenge battling tough government norms and taxes before exiting this phase.

TT BUREAU There

is a strong correlation between the gross domestic product (GDP) and the aviation industry. As a country’s per capita GDP grows, so does its residents’ desire and ability to afford travel, and this desire in turn fuels the demand for aircraft. By 2030, more than 50 per cent of the top 10 economies are expected to be outside the Western Europe and US region. Countries of AsiaPacific, Latin America and Russia, where long-term GDP growth is forecast above average are expected to have a profound impact on commercial aviation. grown at a CAGR of over 17per cent and if this growth were to continue, India is estimated to be among the top three aviation markets in amounting to about 34per cent of the operating costs. The situation has been worsened by the steep depreciation of the rupee versus the US dollar. various forms. This is ironic, considering most domestic airlines made losses that year. The government has in the last six months addressed some of these concerns. Airlines have been allowed direct imports of ATF, FDI by foreign carriers in domestic airlines has been allowed, but this has been clubbed with FII investment, thereby diluting the impact of liberalisation.