Abstract
Despite high rates of growth and reasonably healthy financial results, Indian air transport is not without its economic problems. Surpluses earned on some services are used to cross-subsidize deficits incurred on others and this, in situations where there are some severe shortages in aircraft capacity, is effectively acting as a brake upon the long-term development of tourism. This article examines the economics of the Indian airline industry, identifying the main demand and cost factors affecting Its performance. It considers the possibilities for charters on international routes, and suggests ways in which the economic efficiency of domestic operations might be improved by reforming passenger tariffs.
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