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Indian Airlines Poised to Capture Half of Country’s International Air Traffic by 2027-28, Says CRISIL Report

2 weeks ago
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CRISIL Report

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In a promising forecast for India’s aviation industry, CRISIL, a leading credit ratings agency, predicts that Indian airlines are set to significantly increase their share in the country’s international air passenger traffic by the financial year 2027-28. 

This projection comes amidst a backdrop of recovery from the pandemic-induced slump, driven by strategic fleet expansions and network enhancements by domestic carriers. 

 

Rising Dominance in International Air Travel

CRISIL’s latest report, released on Monday, indicates a substantial surge in the contribution of Indian airlines to the international passenger traffic, with a projected increase of 700 basis points to reach approximately 50% by the fiscal year 2027-28. 

This growth trajectory marks a notable rise from the 43% share recorded in the preceding fiscal year. 

 

Growth Factors and Profitable Ventures  

The anticipated upswing is attributed to several factors, including the aggressive deployment of additional aircraft, expansion of international routes, and the inherent advantage of robust domestic connectivity enjoyed by Indian carriers compared to foreign counterparts, the report noted. 

Highlighting the financial implications, the report emphasizes the profitability of international operations for Indian airlines, indicating a strengthening of their business profiles as a consequence of the rising share in this segment. 

 

Resilience and Focus

Despite the challenges posed by the COVID-19 pandemic, India’s international passenger traffic demonstrated resilience, rebounding from a low of 10 million in fiscal 2021 to approximately 70 million in fiscal 2024, surpassing pre-pandemic levels. 

“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, a growing number of airports and enhanced air travel connectivity are boosting international travel,” said Manish Gupta, Senior Director and Deputy Chief Ratings Officer, at CRISIL Ratings.

The Indian government’s strategic focus on positioning the country as a tourism hub is expected to further bolster inbound international traffic, contributing to the projected growth in passenger volumes. 

 

Strategic Expansions and Route Additions

According to CRISIL, Indian airlines have demonstrated remarkable agility by adding 55 new international routes over the past 15 months, expanding their tally beyond 300. 

These additions include direct flights originating from additional cities to popular long-haul destinations in the United States, Europe, and Australia, effectively reducing flying time and eliminating layovers. 

Additionally, the carriers are focusing on deploying additional aircraft on short- and medium-haul international routes and leveraging codeshare agreements with major global airlines to offer seamless onward connectivity to passengers, says the report. 

 

Natural Advantages

CRISIL underscores that Indian airlines possess inherent advantages that position them favorably in capturing a larger share of the country’s international traffic compared with foreign carriers. 

With superior domestic connectivity, serving a wider range of Indian cities compared to overseas counterparts, Indian airlines can offer end-to-end international connectivity on a single ticket to travelers from tier 2 and tier 3 cities, noted the report. 

According to the CRISIL, India’s geographic location provides easier and accessible air connections between the Europe, Middle East, and Africa (EMEA) and Asia Pacific regions, which positions the country as a hub for international travel.

 

Looking Ahead

Ankit Kedia, Director at CRISIL Ratings, underscores the proactive approach adopted by Indian airlines, which includes investments in wide-body and long-range narrow-body aircraft. 

“To capitalize on the growth in international travel, Indian airlines are investing in wide-body and long-range narrow body aircraft for network expansion, adding new international routes and introducing long-haul non-stop flights to key destinations”, said Kedia.

 

Looking ahead, CRISIL anticipates a robust compound annual growth rate (CAGR) of 10-11% in international passenger traffic over the next four fiscal years, driven by both domestic and international factors. 

The strategic fleet expansion and network enhancement strategies are poised to propel Indian airlines towards achieving a CAGR of 14-15% in the international segment, further solidifying their position in the market.