New Delhi: Indian airlines are expected to increase their share of international passenger traffic originating, terminating, or transiting through India by 700 basis points (bps) to around 50% by fiscal 2028, up from 43% in fiscal 2024.
The improvement will be driven by Indian airlines deploying more aircraft and launching new routes in the international segment, as well as their natural advantage of superior domestic connectivity over foreign carriers.
Indian carriers’ business profiles will improve as a result of their increased share of foreign traffic, which is more profitable than domestic traffic.
India’s foreign passenger traffic increased to over 70 million in fiscal 2024, up from a low of 10 million in pandemic-hit fiscal 2021, surpassing the pre-pandemic level. The percentage of Indian airlines, which had previously been slowly expanding, has increased during the outbreak .
Says Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, “CRISIL Ratings predicts a shift in spending patterns following the pandemic, with Indians increasingly embracing international leisure travel. Increased disposable incomes, visa easement, and increased airports are boosting international travel, with a projected CAGR of 10-11% over four fiscal years.
Indian airlines have expanded their international routes by 55 over the past 15 months, aiming to capture the growth in international passenger traffic due to higher yields and less competition.
Indian airlines are also aiming to deploy additional aircraft on short- and medium-haul international routes and leverage codeshare agreements with major global airlines to offer onward connectivity to passengers.
Indian airlines dominate international traffic due to superior domestic connectivity and end-to-end international connectivity, serving Tier 2 and Tier 3 cities on a single ticket.
India’s geographic location also lends itself well to air connections between the EMEA and Asia Pacific regions, potentially positioning the country as a hub for international travel.
Says Ankit Kedia, Director, CRISIL Ratings, “To capitalize on the growth Indian airlines are expanding their international network by investing in widebody and long-range aircraft, adding new routes, and introducing long-haul non-stop flights, potentially increasing their market share to 50% over the next four fiscals.
