India's domestic air travel market expanded by 26.5 percent in the fist half of this business year as falling fares and a revival in tourist traffic boosted demand in Asia's fourth largest economy.

Figures from the state-owned Airports Authority of India, which manages India's 126 airports, showed 18.52 million passengers used its terminals in April-September, compared with 14.63 million in the year-ago period.

The figures include passengers embarking and disembarking at about 65 operating airfields in the country.

Airports Authority said the total number of international passengers -- embarking, disembarking and in transit -- it handled rose 19.2 percent in the first half of 2004/05 (April-March) to 8.97 million.

An Airports Authority official said India's combined domestic and international traffic growth of 24 percent was the fastest in the world according to data from Airports Council International.

Global air travel grew 12.8 percent in August-July, he said.

"Air travel has been made much cheaper through the advance purchase schemes for tickets and especially if people can plan their travel," an Indian Airlines official said.

"Business travellers are also taking advantage of the improved connectivity in the main travel sectors."

Air travel in India, the world's 12th largest economy, rose 10.9 percent in 2003/04 and 10.5 percent in the preceding year aided by fare cuts by all airlines, but that growth followed a severe downturn three years ago.

Air travel had dipped 5.9 percent in 2001/02 following a global downturn in tourist traffic after the September 11 attacks and a slowing global and domestic economy.

Though India is one of the world's fastest growing economies -- with GDP expected to grow by 6.0-6.5 percent in 2004/05 -- the size of its air travel market is small as steep taxes on fuel and charges on the aviation industry inflate air fares.

Most of India's billion-plus people are, consequently, forced to use the cheaper and subsidized rail network.

But stiff competition between the country's three main domestic airlines -- state-owned Indian Airlines and private carriers Jet Airways and Air Sahara -- has led to regular fare cuts on early purchase of tickets.

Passengers can now purchase tickets at about half normal fares if they buy them a month in advance. The entry of India's first no-frills carrier, Air Deccan, in August has further boosted competition.

A surge in foreign tourist arrivals has also helped. Official figures show the number of foreign tourists arriving in India jumped 26.4 percent in April-September to 1.38 million helped by an ongoing peace process with nuclear rival Pakistan.

Airports Authority figures showed domestic cargo at its terminals in April-September jumped 23.6 percent from a year ago to 222,469 tonnes while international cargo shipments rose 18.9 percent to 395,414 tonnes.

Domestic cargo shipments rose 12.6 percent in 2003/04 and international air freight by 7.3 percent.

(Reuters)