Indian Aviation: International Intentions and Hub Expansion

This is the second article in a series focused on India's aviation market. Our first article set the scene for India’s ambitions and explored the upcoming decade, in this article we shift our focus to India’s international intentions.

In April 2024, India’s international airline capacity reached 7.3 million seats, an increase of 17% from the 6.2 million seats scheduled in the same month in 2019. This growth highlights the strength of India’s aviation recovery post-pandemic.

Looking back over the last decade, India’s international capacity has grown on average by 4.5% each year from a base of 4.7m seats in April 2014. However, what has not changed is the Middle East region’s dominance of India’s international capacity. Ten years ago (in April 2014) the Middle East accounted for 48% of India’s international capacity, in April 2024 that figure has increased slightly to 50%.

Dominance of the Middle East Hubs

Whilst the common perception is that this market is dominated by Middle East carriers serving Indian international travellers wishing to connect through Middle East hubs onto other countries, the reality is that there has been significant Indian migration to the Middle East. An estimated 3.6 million Indians are now based in the UAE, with a further 2.6 million in Saudi Arabia. This demographic contributes significantly to the market, as levels of traffic visiting friends and relatives back in India will always form an important aspect.

 

India's Top 5 International Markets

The top 3 international markets based on capacity in April 2024 are the same as in April 2014. However, Thailand and Qatar are the 4th and 5th largest markets in April 2024, replacing the UK and Malaysia who held those positions 10 years ago.

Source: OAG 

IndiaApril 2014

  • United Arab Emirates 1
  • Singapore 2
  • Saudi Arabia 3
  • United Kingdom 4
  • Malaysia 5

IndiaApril 2024

  • United Arab Emirates 1
  • Singapore 2
  • Saudi Arabia 3
  • Thailand 4
  • Qatar 5

KEY:Moved upMoved downNo changeNew entry

 

Home grown carriers prevail, despite turbulent times

Looking at the dominant airlines in April 2014, the Indian carriers Air India and Jet Airways ranked first and second, accounting for 16% and 15% of capacity share respectively, followed by Emirates in third position with 9% capacity share. Fast forward to April 2024, the top two carriers are both still Indian but IndiGo has replaced Jet Airways as the second largest international carrier in terms of capacity.

This illustrates a wider story of the two carriers having had different fortunes in the last decade. Jet Airways ceased operations in April 2019 due to bankruptcy, although plans to return to the skies this year, while IndiGo has grown rapidly over the period with a fleet of 368 aircraft for an airline only 18 years old.

Air India and Emirates are the first and third largest carriers for international capacity in April 2024, the same positions as held in April 2014. 

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A shift to more direct services

In 2023, Indian international airline traffic stood at 64.6 million passengers, only 600,000 passengers below 2019 levels. From a demand perspective, this highlights that the Indian international market is close to fully recovered post-pandemic. Notably though, while the traffic volumes in 2023 and 2019 are within 600,000 passengers of each other, the nature of the traffic has changed with more passengers traveling on non-stop services rather than making one or more stops at a hub airport.

37.2m passengers made a non-stop trip in 2023, 2m more than in 2019, whereas indirect passengers dropped by 2.5m to 27.4m in the same time period. This equates to a shift from 54% of passengers travelling direct to 57%

An analysis of which hubs lost traffic from 2019 to 2023 shows that Middle Eastern hubs lost 1m indirect passengers, other hubs lost 2.8m indirect passengers and in fact Indian hubs gained 1m indirect passengers. It is worth noting that in the same four-year period Indian carriers also added 52 new international routes which were not served by a fellow Indian carrier in 2019.

Between 2019 and 2023 the Indian international traffic market experienced an increase in direct traffic flows of 2m passengers, along with a growth of 1m indirect passengers utilising Indian hubs for transfers. Additionally, Indian airlines introduced 52 new international routes, highlighting Indian carriers’ efforts to expand their international networks and grow their international transfer services.

Is this only a short-term trend or are Indian airlines putting in place business strategies to maintain this international growth in the long term?

Indian Carriers Gearing up for Growth

Air India, the national carrier, is in a period of transition after the news in 2022 that TATA successfully won the tender to acquire 100% equity of Air India and Air India Express, and the subsequent news that Vistara (TATA/Singapore Airlines owned) and Air India are to merge by 2024 (following regulatory approval). While the airline group are still waiting for regulatory approval from India's National Company Law Tribunal (the final step required to proceed with the merger), Air India has made progress since the government sale with a new Air India brand launched and delivery taken of its first of A350 aircraft in late 2023 with three more delivered since then.

The airline has a further 72 wide body aircraft to be delivered as part of a total order book of 480 aircraft which, after the merger with Vistara, will mean the airline is well placed to expand its international network in the future and bring some much-needed improvement to the current long-haul offering.

Its main rival, certainly in the short haul market, IndiGo, has a significant order of 950 narrow body aircraft to fuel growth well into the next decade, including 69 Airbus A321XLRs which have an extended range over the A321 to allow new international markets in Europe and other parts of the world to be served. Indigo also, after some speculation, confirmed on the 25th April 2024 that it will expand its fleet into widebody aircraft with an Airbus order for 30 A350 aircraft, to be delivered from 2027, with the option for a further 70. This new aircraft order along with the existing narrow body aircraft order will allow IndiGo to compete successfully globally with any Indian and foreign airline in the international market to and from India.

IndiGo and Air India are strategically positioning themselves to not only better compete for international traffic, but also be the driving force for long-term growth from their home market. We will have to wait and see how successful they are and the subsequent impact on other Indian airlines and foreign carriers with a presence in the Indian international market.

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Need a recap of our Indian Aviation series? Read part one here: