Indian airlines are poised to dominate the country's international passenger traffic by the financial year 2027-28, capturing nearly 50% of the market, as revealed in a recent report by Crisil Ratings. This significant surge from the current 43% share in FY24 to an anticipated 50% by FY28 is attributed to several factors, including the expansion of routes and the addition of new aircraft to airline fleets.
The forthcoming rise in Indian airlines' market share is not solely reliant on fleet expansion but is also bolstered by their inherent advantage of superior domestic connectivity compared to foreign carriers. This strategic advantage enables Indian airlines to seamlessly extend their networks into the international sphere, leveraging their established infrastructure and operational capabilities to tap into a broader customer base.
According to the CRISIL Ratings Report
The growth of Indian carriers on international routes will follow the rise in the country's international passenger traffic which has surpassed its pre-pandemic levels, highlighted the report. The rating agency asserted that the improvement would be driven by Indian airlines deploying additional aircraft and adding new routes in the international segment, as well as their inherent advantage of superior domestic connectivity compared with foreign carriers.
The business profiles of Indian carriers will strengthen as a result of their rising share in international traffic, which is more profitable than the domestic segment.
India's international passenger traffic grew to around 70 million in fiscal 2024, from a low of 10 million in the pandemic-hit fiscal 2021, to surpass the pre-pandemic level. The share of Indian airlines, which was rising steadily earlier, picked up pace since the pandemic.
The remarkable growth in India's international passenger traffic can be attributed to several factors, including the resurgence of leisure travel, easing visa requirements, and the robust infrastructure supporting the aviation sector.
The rating agency said international passenger traffic is likely to clock a compound annual growth rate (CAGR) of 10-11 percent over the next four financial years, against a mere 5 percent CAGR in the four years before the pandemic.
They have added 55 new international routes over the past 15 months, taking their tally beyond 300, Crisil Ratings said.
"These include direct flights originating from additional cities to popular long-haul destinations in the United States, Europe, and Australia, effectively reducing flying time and eliminating layovers," it said.
Indian airlines aim to grab a significant chunk of the expanding international passenger traffic, drawn by the promise of higher profits and less competition compared to domestic routes. The favorable geographical location of India further enhances its potential to serve as a hub for global air travel, facilitating seamless air connections across continents.
Officials Comments on this Matter
"A noticeable shift in spending patterns has emerged after the pandemic, as evident in the increasing inclination of Indians towards international leisure travel. Increasing disposable incomes, easing visa requirements, growing number of airports and enhanced air travel connectivity are boosting international travel. The government’s focus on making India a hub for tourism is also expected to provide a fillip to inbound traffic. Thus, international passenger traffic is likely to clock a CAGR2 of 10-11% over the next four fiscals, against a mere 5% CAGR in the four years prior to the pandemic.” said Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings.
“To capitalise on the growth in international travel, Indian airlines are investing in widebody and long-range narrowbody aircraft for network expansion, adding new international routes and introducing long-haul non-stop flights to key destinations. Aided by the planned fleet addition and network expansion strategy, Indian airlines could log a CAGR of 14-15% in the international segment over the next four fiscals, taking their market share to 50%.” said Ankit Kedia, Director, CRISIL Ratings.
The notable increase is credited to various factors, such as:
Fleet expansion and new routes: Indian airlines are growing smarter, adding more planes and opening up new routes to other countries. This means travelers have more options when they fly.
Direct flights: Travelers are now enjoying the convenience of direct flights to major international destinations. With these direct routes, they can skip layovers and reduce their travel time, making their journeys much smoother and more efficient.
Domestic connectivity advantage: Indian airlines stand out for their expansive domestic network, which outstrips that of their foreign competitors. This network allows them to offer seamless connections for travelers originating from smaller Indian cities to international destinations, all under a single ticket. This means passengers can enjoy hassle-free journeys, with the convenience of connecting flights readily available, regardless of their starting point in India.
Strategic location: India's strategic geographical location holds the promise of becoming a pivotal hub for connecting travelers between Europe, the Middle East, and Africa (EMEA) with the Asia Pacific region. This means travelers can benefit from convenient stopovers and seamless transitions when journeying between these key global destinations.
Developments in the Aviation Sector under the Modi Government
Under the leadership of the Modi government, India's transportation infrastructure has undergone a remarkable transformation, as highlighted by the Press Information Bureau India. In a span of just a decade, the country has witnessed a significant surge in its aviation sector, with the number of operational airports nearly doubling from 74 to 158. Impressively, 84 of these airports were constructed in the last decade alone, showcasing a rapid pace of development.
Looking ahead, the Modi government has ambitious plans to further elevate the aviation sector to unprecedented heights over the next five years. These plans encompass the development of new airports, the modernization of existing ones, and the expansion of international airports, reflecting a strong commitment to enhancing India's connectivity and facilitating economic growth.
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