2008 Tourist Arrivals Exceed Forecast Data released by India's Ministry of Tourism in February 2009 indicated that foreign visitor arrivals grew by 5.6% y-o-y in 2008. Although this was below the 2007growth rate of 14.3%, we view this 2008 result as highly positive, given that the global tourism industry is declining in line with the economic downturn. Indeed, tourist arrivals came in slightly higher than our estimate, at 5.37 million. However, tourist arrivals slumped sharply in December and January. In December they fell by 12.5% y-oy to 521,990, while in January they fell by 17.6% to 487,262. While we believe that some of this decline may be related to the global downturn, it was primarily caused by the negative impact of the November terrorist attacks in Mumbai, which targeted the popular Taj Mahal hotel and other tourist areas. 172 people were killed and 250 wounded. This attack was one of the most serious ever to take place in India and will have a major impact on tourism in the medium term, given that Mumbai is a major tourist hub and the most popular point of entry for foreigners visiting India. Although we expect this negative publicity to recede towards the end of 2010, its effect will exacerbate the impact of the global downturn. As a result, we have downgraded our 2009 arrivals forecast to 5.63 million. Mumbai Attacks Focus Terrorist Threat Although India has long been the focus of domestic terrorism threats, these have largely been based in and around the disputed Kashmir region. The Mumbai terrorist attacks of 26-29 November differed in terms of scope and operational capacity, and have raised major concerns regarding the possibility of further such attacks. The attacks deliberately appeared to target areas frequented by foreign tourists and businesspeople. Attacks were carried out in the Chhatrapati Shivaji railway terminus, the CamaHospital, the Taj Mahal hotel, the Trident-Oberoi Hotel and the Jewish Centre at Chabad House and accounts suggested that foreigners were deliberately targeted by the gunmen. The attack was well organised and demonstrated a worrying intelligence gap on the part of the Indian security services. The attackers arrived in India via boat from Pakistan, and India believes that they were members of Pakistan-based militant group Lashkar-e-Tayyiba (LeT). While investigations are ongoing, entrenched tensions between India and Pakistan will impede such efforts, while Pakistan's precarious political situation will likewise hinder attempts to crack down on the LeT. As a result, while such a major attack is unlikely to be repeated, given the heightened state of alert within India, the shifting focus of attacks towards major cities such as Mumbai constitutes a worrying trend going forward. New Delhi Terminal Opens On 26 February 2009, a new terminal (1D) was inaugurated at Delhi international airport by Civil Aviation Minister Praful Patel. This terminal, which cost INR5 billion to construct, is initially intended to house outbound domestic passengers. However, major carriers Air India, Jet Airways and Kingfisher Airlines will not be shifting their operations to Terminal 1D. Instead, the three will wait for the completion of the new Terminal 3, scheduled to be opened just ahead of the 2010 Commonwealth Games. Terminal 3 will have capacity for approximately 35 million passengers per year and will cater for international flights and some domestic flights. At this point, Terminal 1D will be used solely for lowcost domestic airline flights.
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