Hopes that ailing Indian air carriers could be poised for an improvement in fortunes after being badly hit by a 5% drop in passenger numbers in 2008 are raised as Indian travellers  once more take to the skies.

According to the Directorate General of Civil Aviation, “Indian airlines carried 44m passengers on domestic flights in 2009, up nearly 8 per cent on the previous year, and just over the 43m carried in 2007, before the financial crisis hit”. These figures are a small spark of good news for an industry which has suffered very difficult times over the past few years, including high fuel prices and price sensitiivity of Indian travellers.

“We are starting to see the emergence of a more favourable environment,” the Centre for Asia Pacific Aviation said in a new report on the prospects for India’s struggling airlines. “Discussions with the industry indicate a discernible increase in demand as business and consumer confidence increases, though yields remain depressed.”  They also predict an increase in domestic air traffice of around 15% during the next 12 months from April.

Over the past year, India’s largest private carriers, Jet Airways and Kingfisher, and state-owned Air India, have been aggressively slashing capacity and struggling to pare staff costs through lay-offs and cuts in salaries, leading to strikes in some cases. Between them they have about half of the domestic air market in India and have been moving towards economy, low cost, no frills flights.

The pick-up in air travel began in July, after 12 consecutive months of year-on-year contractions in passenger numbers, with the rebound gaining momentum in the final quarter.