May 7, 2024
Superior domestic connectivity gives Indian airlines a competitive edge over foreign counterparts
Indian carriers have added 55 new international routes, surpassing 300, in the past 15 months
Increasing disposable incomes and easing visa regulations has propelled India's international passenger traffic surge
Government initiatives to boost the tourism sector are expected to fuel further growth in inbound international traffic
According to a recent report from CRISIL Ratings, Indian carriers are poised to secure approximately half of the nation’s international passenger traffic by the fiscal year 2027-28. This anticipated surge represents a 7% increase from their current 43% share in FY24. The growth is attributed to various factors, such as expanding routes and introducing new aircraft. Additionally, Indian carriers benefit from their robust domestic network, giving them a competitive edge over foreign counterparts in capturing the international market.
The report underscores the correlation between the growth of Indian carriers on international routes and the overall rise in the country’s international passenger traffic, which has rebounded to pre-pandemic levels. Consequently, Indian airlines are expected to enhance their business profiles, capitalising on less competitive international routes and yielding higher profits than domestic operations.
To capitalise on this opportunity, Indian carriers have strategically added 55 new international routes in the past 15 months, surpassing 300 routes. These new routes predominantly cater to popular long-haul destinations such as the United States, Europe, and Australia, aiming to minimise travel time and eliminate passenger layovers.
Several factors, including increased disposable income, relaxed visa regulations, and improved air travel connectivity, drive India’s international passenger traffic surge. In FY24, international passenger traffic reached approximately 70 million, marking a significant rebound from the pandemic-hit FY21, which stood at 10 million. Moreover, FY24’s traffic surpassed pre-pandemic levels, reaching 67 million passengers in FY20.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer at CRISIL Ratings pointed out that Indians’ spending patterns are changing as a result of the pandemic. According to him, Indians are increasingly interested in international leisure travel, which is due to several factors such as rising disposable incomes, easier visa procedures, expanding airport infrastructure, and improved air connectivity.
Gupta also emphasised the government’s efforts to boost India’s tourism sector, which is expected to drive inbound international traffic further. Owing to government initiatives and policy support, he projected a CAGR of 10-11% in international passenger traffic over the next four fiscal years, compared to a mere 5% CAGR in the four years preceding the pandemic.
Source: Mint