The civil aviation industry, which was hit hard by the global financial meltdown and high fuel cost, saw a strong recovery in 2010 with the domestic passenger traffic rising 19 per cent to 51.53 million, the Economic Survey said on Friday.
In 2009, the traffic was 43.3 million.
"The civil aviation sector in India has resumed a higher trajectory of growth after emerging from adverse impact of global financial crisis. The potential for higher levels of growth in the future is also very high," said the Economic Survey 2010-11, tabled in Parliament.
It, however, cautioned that Indian carriers operate in an exceptionally high-cost environment and higher prices of air turbine fuel can derail the growth of the sector.
"In the backdrop of higher crude oil prices, there is a severe risk of dampening of passenger market growth by quickly making air travel out of reach for a significant portion of the market, which was fuelling its growth," the Survey said.
It also noted that widening differential in ATF prices, which account for 40 per cent operating costs of the Indian carriers and its huge negative impact on airline balance sheet, are eroding their competitiveness.
"The losses being registered by Indian carriers may result in reduced connectivity, thereby affecting growth in this sector," the Survey said.
On the steps taken by the Civil Aviation Ministry to push growth, the Survey said that a Working Group on Regulatory Framework has been set up to protect consumer interests including disclosure of passenger tariffs and conditions of service by domestic airlines.
"In order to ensure appropriate protection for air travellers in the event of flight disruption, that is cancellations and delays without notice, airlines have been directed to provide compensation in addition to the refunding of ticket price for the inconvenience caused," it said.
On the performance of ailing Air India, the survey pointed out that the government has infused Rs. 2,000 crore (Rs. 20 billion) in the national carrier as equity to reduce the debt-equity ratio, while the company has exuded confidence in turning around its performance in next two years.