At Rs1,103 billion in 2005, India’s transportation industry is the largest sector of the travel and tourism industry. The sector outperformed the review period CAGR performance in 2005, with 15% sales value growth. Investment in international quality roads, the launch of low cost carriers as well as the expansion of the railways were responsible for driving growth.
Six new low cost carriers were launched in India in 2005, and there seemed to be room for more. SpiceJet Ltd was the outstanding success during the year. As competition heated up, prices came down, making the Indian consumer the winner in all respects. Promotional fares as low as Rs1 were launched, but this was limited to short periods, as fuel price hikes and taxes made it difficult for companies to sustain these fares. Tier II city routes that were earlier sidelined or ignored were taken note of and serviced. The airline subsector outperformed the growth of the transportation sector as a whole in 2005.
