India records 2nd highest domestic air traffic growth

India experienced the second strongest domestic air traffic growth in the world after Brazil, but the high growth hid the financial weakness facing the Indian carriers, global airline body IATA has said.

"India experienced the second strongest growth among the major domestic markets at 12.3 per cent.

"This lagged behind the 16.3 per cent increase in capacity over previous-year levels," the global traffic results for February announced by the International Air Transport Association said.

Brazil had the fastest growth compared to the previous year as the demand was up by 17.9 per cent.    

"Nonetheless, India's carriers filled 75.4 per cent of seats. The strong traffic growth masks financial weakness resulting from high operating costs and taxation," it said.

The global traffic for February showed an 8.6 per cent improvement in passenger demand and a 5.2 per cent rise in cargo demand compared to the same month in the previous year.

"The outlook is fragile. Improvements in business confidence slowed in February. This will limit the potential for business class travel growth," IATA chief Tony Tyler said.

Across the world, "we see ill-conceived policy initiatives that over-regulate, excessively tax or otherwise restrain the aviation industry. This prevents it from being the catalyst for economic growth that it can be," he said.

Apart from the rapid rise in oil prices, the UK was hiking air passenger duty and Europe was adding to the burden by including international aviation in its emissions trading scheme, "the extra-territorial aspects of which are creating the possibility of a trade war that nobody can afford."

Noting that the first quarter of 2012 calendar year was ending with "a considerable amount of uncertainty", he said while the threat of a European financial meltdown seemed more remote than it did only a few months ago, "the political risks that aviation faces are growing".