New Delhi: India’s aviation sector, which contracted 4.7% in 2008, is expected to grow by at least 8.5% every year till 2015, civil aviation minister Praful Patel said on Thursday. “We do expect that kind of growth because of the 300-million-strong middle class,” Patel said.
Hopeful: Union minister for civil aviation Praful Patel coming out after a cabinet-level meeting in New Delhi on Thursday. PTI
If the economic situation improves, the sector could even see a 25-30% growth, the minister said.
“It’s reasonable,” domestic carrier SpiceJet Ltd’s chief commercial officer Samyukth Sridharan said.
The country’s civil aviation sector grew 46.4% in 2006 and 32.5% in 2007, before shrinking in 2008 in the wake of a global economic downturn.
In the first half of 2009, traffic has dipped by 4.9% but figures for June and July have shown better-than- expected passenger numbers.
Civil aviation in India—the world’s ninth-biggest—is a $14 billion (Rs67,340 crore) industry.
The government also decided on Thursday to constitute a group of ministers to look into the high sales tax of jet fuel levied by the state governments. “The base price of fuel... is much higher then most places internationally,” Patel said. Domestic airline firms have been complaining about the high taxes on aviation fuel, which accounts for around 40% of their operating costs.
The government is yet to decide on who would comprise the group of ministers and has not announced a timeline for the outcome of the committee’s deliberations.
Airline stocks shot up after the announcement on the Bombay Stock Exchange. SpiceJet was up 11.53% to close at Rs20.80, Kingfisher Airlines Ltd rose 6.23% to Rs48.60 and Jet Airways (India ) Ltd gained 3.28% to touch Rs239.20.
The benchmark Sensex index was up 3.46%.