Traffic growth forecast is strong
Travel to, from, and within South Asia is expected to grow 8.3 percent over the next 20 years. Domestic, regional, and interregional travel to the Middle East and to Southeast Asia will be the biggest drivers. Traffic within South Asia alone is expected to grow 9.9 percent annually—the highest growth rate among the traffic flows published in this forecast.
Air transportation growth is driven largely by the region’s economic development and population demographics. South Asia GDP is forecast to grow at an average rate of 6.4 percent annually through 2034. India dominates the South Asian economies, contributing more than 80 percent of the region’s GDP. Economic liberalization measures are stimulating the country’s growth. Among these measures are industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment that began in the early 1990s. India’s GDP is forecast to grow 6.6 percent annually over the 20 years. The region’s population totaled nearly 1.7 billion in 2014, and a growing share is entering the workforce. Economic growth leading to rising incomes underpins the forecast for strong air travel demand.
A significant development in the Indian domestic market is the growing dominance of the low-cost carrier model. Pure LCCs now account for 60 percent of domestic capacity in India, and full-service carriers are shifting additional capacity to their low-cost operations. LCCs further stimulate growth in aviation and tourism through lower fares and additional services on regional routes.