CRISIL predicts Indian airlines will secure half of India's international passenger traffic by FY28

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CRISIL predicts Indian airlines will secure half of India's international passenger traffic by FY28

Team Finance Saathi

07/May/2024

Key Points:

Indian airlines are projected to capture up to 50% of India's international air passenger traffic by FY28, marking a significant increase from the current 43%.
Factors driving this growth include fleet expansions, opening of new routes, and enhanced domestic connectivity, coupled with rising disposable incomes and government initiatives to boost tourism.
With a forecasted compound annual growth rate (CAGR) of 10-11% in international travel, Indian carriers are strategically investing in wider fleets to capitalize on this trend, aiming for a 50% market share by FY28.

In a promising projection, CRISIL, a leading global analytics company, anticipates a significant surge in Indian airlines' dominance in the country's international air passenger traffic by fiscal year 2028. Currently commanding 43% of this market, Indian carriers are primed to seize up to 50% of the share, marking a remarkable uptick in their influence within the aviation sector. This bullish outlook is underpinned by several key factors propelling the industry's growth trajectory.

Rebound and Resilience

Despite the profound disruptions caused by the COVID-19 pandemic, the international passenger traffic in India has demonstrated remarkable resilience, bouncing back to surpass pre-pandemic levels. This resurgence can be attributed to multiple factors, including the gradual relaxation of visa requirements, an uptick in disposable incomes, and concerted governmental efforts to bolster tourism. As travel restrictions ease and consumer confidence rebounds, the appetite for international travel among Indian passengers continues to soar, laying a robust foundation for sustained growth in the coming years.

Strategic Expansion and Investments

Central to the ascent of Indian airlines on the global stage is their proactive approach to fleet expansion and route diversification. Recognizing the immense potential offered by burgeoning international travel demand, Indian carriers have embarked on ambitious fleet expansion initiatives, bolstering their capacity to cater to a wider spectrum of destinations. The opening of new international routes, coupled with the strengthening of domestic connectivity networks, further augments the appeal of Indian airlines among travelers, offering seamless intermodal experiences and greater convenience.

Capitalizing on Growth Opportunities

CRISIL's forecast of a robust compound annual growth rate (CAGR) of 10-11% in international travel over the next four fiscal years underscores the tremendous growth opportunities that lie ahead for Indian carriers. Buoyed by this optimistic outlook, airlines are doubling down on their efforts to capitalize on emerging market trends, investing in fleet modernization, operational efficiency enhancements, and customer-centric innovations. With a projected CAGR of 14-15% in the international segment, Indian airlines are strategically positioned to significantly bolster their market share, potentially capturing half of the market by FY28.

Navigating Challenges

While the outlook appears promising, the aviation sector is not devoid of challenges. Rising fuel prices, regulatory complexities, geopolitical uncertainties, and evolving consumer preferences pose formidable hurdles that airlines must navigate adeptly to sustain their growth momentum. Moreover, the lingering impact of the COVID-19 pandemic continues to cast a shadow of uncertainty, necessitating agile strategic responses and contingency planning to mitigate operational risks and ensure business continuity.

Government Support and Policy Imperatives

Critical to the sustained growth and competitiveness of the aviation industry are proactive government policies and regulatory frameworks that foster a conducive business environment. Recognizing the pivotal role of aviation in driving economic growth, governments at both the central and state levels have rolled out a slew of initiatives aimed at enhancing infrastructure, streamlining regulatory processes, and promoting investments in the sector. These policy imperatives, coupled with fiscal incentives and strategic partnerships, are instrumental in bolstering the resilience and competitiveness of Indian carriers on the global stage.

Conclusion

As Indian airlines chart a course towards greater prominence in the international aviation landscape, the stage is set for a transformative journey marked by innovation, expansion, and resilience. With a potent combination of strategic foresight, operational agility, and customer-centricity, Indian carriers are poised to emerge as formidable contenders, capturing a lion's share of the country's international air passenger traffic by fiscal year 2028. As the industry gears up for this paradigm shift, stakeholders across the ecosystem must collaborate synergistically to harness the full potential of this burgeoning growth trajectory and propel India's aviation sector to new heights of success and global prominence.

Also Read : Report Anticipates 7-9% Growth in Lab-Grown Diamond Exports for FY25

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CRISIL predicts Indian airlines will secure half of India's international passenger traffic by FY28

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