According to Crisil Ratings, it is anticipated that the market share of Indian airlines in international passenger traffic originating from, terminating in, or transiting through India will witness a 50 percent rise by fiscal year 2028, compared to the 43 percent share in 2024. The rating agency attributed this growth to the expansion of Indian airlines' fleet sizes.
According to Crisil Ratings, the market share of Indian airlines in international passenger traffic originating from, terminating in, or transitioning through India is projected to experience a significant surge of 50 percent by fiscal year 2028, compared to the 43 percent share recorded in 2024.
Crisil Ratings emphasizes that this growth will be driven by Indian airlines expanding their fleet sizes, adding new routes in the international segment, and benefiting from their superior domestic connectivity compared to foreign carriers.
The increasing share of Indian carriers in international traffic will contribute to the strengthening of their business profiles, as the international segment is generally more profitable than the domestic market.
India witnessed a notable recovery in international passenger traffic, surpassing pre-pandemic levels, with around 70 million passengers in fiscal year 2024, compared to a low of 10 million in the pandemic-affected fiscal year 2021. The share of Indian airlines in international traffic has been rising steadily and gained momentum since the pandemic.
Changing spending patterns, a growing preference for international leisure travel among Indians, rising disposable incomes, relaxed visa requirements, increased airport capacity, and improved air travel connectivity are cited as factors driving the growth in international travel, according to Manish Gupta, Senior Director and Deputy Chief Ratings Officer at CRISIL Ratings. The government's focus on positioning India as a tourism hub is also expected to boost inbound traffic.
Crisil Ratings predicts that international passenger traffic will achieve a compound annual growth rate (CAGR) of 10-11 percent over the next four financial years, compared to a CAGR of only 5 percent in the four years prior to the pandemic.
Indian airlines are actively seeking to capture a significant portion of this growth in international traffic, as it is generally more profitable, with higher margins and less intense competition than domestic routes. They have expanded their network by adding 55 new international routes in the past 15 months, bringing the total number of routes to over 300.
These new routes include direct flights from additional cities to popular long-haul destinations in the United States, Europe, and Australia, reducing flying time and eliminating layovers. India's favorable geographic location also positions it well as a hub for international travel.
To capitalize on the growth in international travel, Indian airlines are making investments in widebody and long-range narrowbody aircraft for network expansion, introducing new international routes, and offering long-haul non-stop flights to key destinations, as highlighted by Ankit Kedia, Director at Crisil Ratings.
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