By the fiscal year 2027–2028, Indian airlines are predicted to handle up to half of the nation's foreign passenger traffic, according to a report released on Monday by credit rating agency CRISIL. According to the report, Indian airlines' share of international passenger traffic—which includes both traffic entering and leaving the nation and traffic moving through it—is expected to increase 700 basis points, from 43% in the previous fiscal year to almost 50% by 2027–2028.
Also, as per the CRISIL Ratings' assessment, the increase will be mostly driven by Indian airlines launching new routes in the international category and deploying more aircraft, in addition to their natural advantage of having better internal connectivity than foreign carriers. Further, the survey showcased, Indian carriers' business profiles are expected to improve due to their increasing proportion of foreign traffic, which is more lucrative than domestic traffic.
CRISIL also stated that the India's foreign passenger traffic increased from 10 million in the pandemic-hit fiscal 2021 to around 70 million in the fiscal 2024, surpassing the pre-pandemic level. It stated that since the epidemic, the share of Indian airlines, which had been growing gradually previously, has accelerated.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer at CRISIL Ratings, stated that "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," Gupta said.
It is anticipated that the government's emphasis on establishing India as a tourist center will stimulate incoming travel. Consequently, he said, the compound annual growth rate (CAGR) for international passenger traffic over the next four fiscal years is expected to be between 10 and 11 percent, compared to just 5 percent in the four years previous to the pandemic. Over the last 15 months, Indian airlines have introduced 55 new overseas routes, bringing their total to over 300, the statement stated.
According to CRISIL, these include direct flights to well-liked long-haul locations in the US, Europe, and Australia that depart from additional cities. This successfully cuts down on travel time and does away with layovers.
Additionally, it stated that Indian airlines plan to use codeshare arrangements with major foreign airlines to give onward connection to customers and to deploy extra aircraft on short- and medium-haul international routes.
Therefore, compared to foreign airlines, Indian airlines have certain inherent advantages in snatching up a bigger portion of the nation's overseas traffic, according to CRISIL. As per the survey, they can provide travelers from tier 2 and tier 3 cities with end-to-end international connection on a single ticket and have better domestic connectivity than their foreign competitors, who only service a few Indian cities.
Additionally, according to the paper, India's geographic location makes it advantageous for aviation links to be made between the Asia Pacific and Europe, Middle East, and Africa (EMEA) areas, possibly making the nation a hub for international travel.
"To capitalize on the growth in international travel, Indian airlines are investing in widebody and long-range narrow body aircraft for network expansion, adding new international routes and introducing long-haul non-stop flights to key destinations," stated Ankit Kedia, Director, CRISIL Ratings.
Indian airlines should see a CAGR of 14–15% in the international category over the next four fiscal years, increasing their market share to 50%, according to Kedia, thanks to the planned fleet addition and network growth strategy.
