CNN Money says: India’s airline industry is a mess. Taxes are sky-high, infrastructure is poor and profit margins are razor thin. A string of carriers have gone out of business, and many others are struggling to stay afloat. For now, howevery, India has the least expensive flights on the earth.
In India, airlines charge an average $10.20 to travel 62miles, according to a survey by GoEuro. Air travelers in China pay twice for the same distance, and Brazilians pay four times more. Even India’s railways charge a higher price per mile.
The airlines in India compete with each other to capture market share to the extent that sometimes they operate flights at a loss. Price-conscious consumers are the ultimate winners as well as the airline that can survive the price wars. Kingfisher Airlines went out of business; Spice Jet was bailed out, and the national carrier Indian Airlines has reported a cumulative debt of $16 billion. However, funds from foreign investors have provided a boost, and analysts hope that Prime Minister Narendra Modi will push through meaningful reforms. The potential for growth is huge since India’s rapidly growing middle-class has the means to spend on luxuries like air travel.
“There are 25 to 30 million people that use airplanes in India, whereas there are nearly 300 million that can actually afford to travel but don’t because of unavailability of flights or the lack of airports,” says Anurag Bhatia, Executive Director of Bird Group, a provider of aviation services to India’s biggest airports. The Modi-led government has pledged to build 200 low-cost airports in tier-II and tier-III cities across the country over the next 20 years to boost regional connectivity.