Germany′s Lufthansa Eyes India | Business| Economy and finance news from a German perspective | DW | 27.09.2005
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Germany's Lufthansa Eyes India

Lufthansa wants to expand into India, the country with the world's second largest population: India offers not only inexpensive labor for foreign investors but also is becoming more attractive as a market.


Lufthansa's lining up to fly to India more frequently

Lufthansa currently connects Germany and India 38 times a week, the most of any European airline and two-thirds more flights than as recently as 2003. The market is booming, driven mostly by business travelers and India's rapidly growing middle-class in a population of more than one billion people. Lufthansa views the Asian sub-continent and 150 million potential customers more and more positively.

"It's an enormous number," said Werner Heesen, Lufthansa's director for South Asia. "India's economic development has caused the buying power to jump incredibly. The money is now there meaning that an increasing number of people can afford to fly."

Gateway of India in Bombay

The Gateway of India in Bombay, a city that is the hub and bottleneck of air travel to India

There is room for growth. Until now, no more than seven million Indians fly regularly. However, if the country's domestic flights are added to the picture, the number leaps to a market of 250 million passengers. Because bargain airlines are starting up constantly, ticket prices are falling.

Deregulation leads to greater competition

The current boom became possible after the Indian government loosened its decades-old stranglehold on air travel. With 20 percent annual growth, the Indian market is, in the words of airline expert Kapil Kaul, "breathtaking compared to the rest of the world." He compares the market to a sleeper who suddenly awoke and began to run a marathon.

Kaul fears thought that the South Asian market could become overheated. There is a shortage of some 300 pilots which in the next five years could balloon to 4000. With similar developments for aircraft engineers and air traffic controllers in the offing, "a huge problem is developing -- and nobody has an answer."

Lufthansa führt neuen Speiseplan ein

Werner Heesen (l), Passenger Sales Lufthansa India & Director SouthAsia, announcing new plans for Indian flights earlier this year

A lack of trained personnel isn't the only dilemma in the near future. There's also a completely inadequate infrastructure. Above all, India's metropolitan airports are close to collapse because they are too small.

"Even major cities like Delhi, Mumbai and Bangalore have only one take-off and landing strip," said Lufthansa's Heesen.

Air traffic is being slowed by an airport capacity that was built for seven million passengers and not 250 million, creating for Lufthansa and other large European carriers the biggest "natural limitation."

Modernization in the works

Still, the ambitious Indian government promises improvements. Modernization, less bureaucracy and partial-privatization are supposed to remove the brakes on growth.

The government plans to expand the airports in Bombay and Delhi, the current hubs -- and bottlenecks -- of air traffic to India. Once those expansions are completed, it's still unclear when that will be, then carriers will find it easier to bring their passengers to the desired destinations in India.

01.02.2005 MIG fraport.JPG

Baggage workers in India will have more to do in the future

"Even now when flights are distributed to other cities, the infrastructure can deal with the increasing traffic," said India's Air Traffic Minister Praful Patel.

Most industry analysts believe the government will succeed in improving conditions. Until 2010, however, those traveling to the sub-continent will run across many construction sites at Indian airports. Those temporary inconveniences are the starting blocks for the race, and then, according to Kaul, India will experience incredible growth.

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