Small city routes hold big potential for India airlines

Sun Oct 5, 2014 5:03pm EDT
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By Tommy Wilkes

NEW DELHI (Reuters) - The airport in Patna, one of India's smaller cities and the capital of its poorest state, is so crowded that government authorities this year said they need to build another one.

The airport has seen the number of passengers, and daily flights, double in the last four years as the country's largest carrier IndiGo Airlines and smaller rivals like GoAir seek to cash in on a surge in demand for air travel from smaller regions to offset losses on highly competitive "trunk" routes linking big cities.

"We are close to capacity in our arrivals and departure lounges," said Santosh Kumar, who runs operations at Patna airport. "We can handle more planes but it is only possible with a bigger terminal. We need a bigger airport."

Higher disposable incomes, an expanding middle class and rapid urbanization have made India one of the world's fastest growing domestic aviation markets, where passenger numbers are expected to grow by more than 75 percent in the next six years to exceed 217 million.

Much of that growth is expected to come from smaller cities like Patna, where more people are flying for the first time. Passenger numbers from these places have risen nearly 17 percent a year since 2009, compared to 7.6 percent from larger hubs, data from industry analysts CAPA - Centre for Aviation show.

That trend is set to continue as more airports are built in smaller cities. This month, Prime Minister Narendra Modi's government picked five smaller cities to kick off a nationwide initiative to build about 50 new airports.

"The opportunity is changing," said Aditya Ghosh, president of IndiGo, which now flies larger Airbus A320 planes to and from Patna instead of smaller ATR jets. "On some of these smaller routes, the planes are more full than the trunk routes."

Fifth largest carrier GoAir has also boosted flights to and from Patna and other smaller cities, Chief Executive Giorgio de Roni said, as these regional routes now make more money than the more congested routes between Mumbai and Delhi.   Continued...

An IndiGo Airlines Airbus A320 aircraft is pictured parked at a gate at Mumbai's Chhatrapathi Shivaji International Airport February 3, 2013. REUTERS/Vivek Prakash/Files