Index : 2,099 | 1Yr : +7.56% | 1Mo : -29.7%
Category : Sectoral Trackers
Min Investment : 2,427
Today, India is the fastest growing aviation market in the world and yet only about 2% of the population travels by air. It is expected to become the third largest aviation market by 2020. During the liberalization of the economy, GOI repealed and replaced the Air Corporation Act and enabled private players to enter the airlines Industry. Today, the industry is dominated by low-cost carriers or also known as Budget Airlines. These are domestic carriers which aim to make money by sheer volumes as they have adopted a no frills services business model. With increase in commercial activity, leisure travel and just an overall increase in spending due to growth in per capita incomes, the airlines industry is expected to benefit steadily over the long-run. Government initiatives like FDI norms, easing restriction that allow domestic airlines to fly internationally, commissioning of new domestic airports and a other measures can be instrumental to tap the huge growth opportunities.
It is important to know that the airlines industry is affected by oil prices as aviation fuel is the largest recurring cost, government regulation, severe price competition, exogenous events, taxes and interest rates. Due to a combination of the above factors, survival of the fittest is the secret mantra of the airlines sector. The high entry barriers and foreign joint ventures are expected to benefit the existing carriers which are being run efficiently.