IATA blames note ban as India loses fastest-growing domestic aviation market

India lost its fastest-growing domestic aviation market tag to China as it registered the lowest growth in 18 months, primarily due to demonetisation, IATA said


The domestic passenger traffic in India in March grew at 14.6% while in China it was at 15.1%. Photo: Abhijit Bhatlekar/Mint
The domestic passenger traffic in India in March grew at 14.6% while in China it was at 15.1%. Photo: Abhijit Bhatlekar/Mint

New Delhi: India lost its fastest growing domestic aviation market tag to China in March as it registered the lowest growth in 18 months, primarily due to demonetisation, the global airlines’ grouping international air transport association (IATA) has indicated.

The domestic passenger traffic in India in March grew at 14.6% while in China it was at 15.1%. “This is the first possible sign of reduced cash supply and wider economic uncertainty weighing on demand,” said IATA. Prime Minister Narendra Modi had on 8 November last year announced the scrapping of 500 and 1,000 rupee notes. India was at the top of the global charts for the domestic air passenger growth for 23 straight months until February. “China overtook India as the fastest growing domestic market at 15.1%, posting the fastest year-on-year domestic growth rate for the first time in two years,” according to IATA.

The association attributed the passenger growth in China to its robust services sector growth as well as supply developments. As for India, it said that after posting over 20% growth in domestic passenger market for 13 consecutive months until January this year, the demand for domestic air travel dropped to 17% in February and 14.6% in March. However, India’s domestic travel demand growth was still twice that of the global average which stood at 7.6% in March.

India is the third-largest aviation market in terms of domestic passenger traffic, according to an industry report. India’s domestic air passenger traffic stood at 100 million in 2016, and was behind only the US (719 million) and China (436 million), Sydney-based aviation think-tank Capa Centre of Aviation said in a report.

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