Strong traffic growth
Travel to, from, and within South Asia is expected to achieve an average annual growth rate of 8.1 percent over the next 20 years, significantly outpacing all other regions in this report. The economic and demographic trends driving the expansion of air travel are very strong. In 2010, the combined population of South Asian countries totaled 1.65 billion people. Residents, on average, are relatively young by world standards. Real gross domestic product (GDP), per capita, has expanded significantly, growing at an average annual rate of 7.2 percent from 2000 to 2010.
The commercial aviation industry has been helped by liberalization in key markets, including the domestic Indian market and travel between India and the Middle East. Liberalization is allowing airlines to open more routes, add more frequencies, and experiment with new business models. Reforms have also increased competition between airlines, thereby lowering prices. As a result, air services within the region have become more convenient and less expensive. This has happened at a time when people's ability to travel has increased.
India's airlines expand
India's airlines suffered a period of declining traffic from mid-2008 to mid-2009. While this downturn was largely the result of the global economic downturn, difficulties were compounded by an ill-timed influx of new capacity, resulting in unsustainable price competition between airlines. But the industry has weathered these challenges, and the healthier carriers are once again expanding.
Although service to the largest cities is generally strong, airlines are considering options for serving smaller cities with smaller aircraft. As this service develops, air travel will become accessible to a broader section of the Indian population, and traffic feeds into the main routes will be stronger.
Indian international air traffic weathered economic hard times much better than did domestic traffic. After a brief period of declining international passenger counts in early 2009, strong growth resumed and it is expected to continue. Particularly robust traffic gains are expected for routes between India and the Middle East, which have been given a boost by the entry of low-cost carriers.
Growing international trade and tourism
Outside of India, South Asian airlines are preparing to meet a growing demand for service resulting from increased international trade and the increasing ability of resident populations to travel abroad. Intraregional tourism is already well established, including active routes between India, the Maldives, and Sri Lanka. As household incomes rise, vacation travel both within and outside the region is expected to grow.
