Indian carriers' focus is now on international market to boost revenues

According to Joshi of Network Thoughts, during next few years share of Indian carriers in itn'l traffic will rise, because Air India will induct more capacity and so will IndiGo, with XLR aircraft

At a Confederation of Indian Industry event on May 24 last year, Aviation Minister Jyotiraditya Scindia advised Indian carriers to prioritise expanding their international flight operations due to the tight margins in the domestic aviation market, largely driven by intense competition. This counsel resonated well with aviation executives, who had already been pursuing this strategy since the lifting of pandemic-induced restrictions on Indian aviation in 2022.

The impact is evident in the growing market share of Indian carriers in the international air passenger traffic connecting India. According to aviation analytics firm Cirium, the five major Indian carriers — IndiGo, Air India, Air India Express, Vistara, and SpiceJet — accounted for 40.94 per cent of international flights to and from India in March 2020, just before the pandemic-induced restrictions took hold. By March 2023, their combined share had risen to 46.15 per cent.

“Indeed our growth over the same time last year has been faster in international versus domestic,” a spokesperson for IndiGo told Business Standard. “Some of this is because our post-Covid schedule recovery was already largely complete in domestic last year, while there were still elements of international that were yet to be completely recovered – something that has been achieved and surpassed this year.”

Base effect

Cirium’s data also underscores the point regarding domestic recovery. At present, there are 7,911 flights every week operating between India and other countries, reflecting a year-on-year growth rate of 13.9 per cent. In contrast, growth in scheduled domestic weekly flights was merely 0.5 per cent. IndiGo has articulated its current focus on implementing the “strategy of internationalisation”, operating from a smaller base compared to its domestic operations. IndiGo now operates 1,392 international services every week, growing at 24.4 per cent. In contrast, its domestic base is substantially larger, with 12,525 flights per week, and growing at 9.4 per cent annually, according to Cirium.

“Since international is at a lower base and is going to be an area of accelerated focus for IndiGo in the period to come, this growth will certainly look higher in percentage terms, but does not take away from the fact that we are continuing to invest significant portions of our incremental capacity in opening new routes, frequencies and destinations in domestic India,” the IndiGo spokesperson mentioned.

Bilateral issue

The expansion of Indian carriers' international services is further facilitated by the Indian government's reluctance to grant additional bilateral rights to the Persian Gulf nations. This stance is particularly significant, given the robust presence of carriers such as Emirates and Qatar Airways, which handle a substantial portion of the passenger traffic between India and North America and Europe via their hubs. Emirates Airline President Tim Clark had in March 2023 termed India's decision to not expand bilateral rights with the United Arab Emirates as “very vexing”, adding it was a “pity” that the carrier was unable to operate more flights to India amid high demand. A “bilateral air services agreement”, negotiated between the two countries, establishes the number of weekly flights or seats permitted between the two nations. However, Air India’s chief executive officer and managing director, Campbell Wilson, supports the Indian government’s stance. A few days back, Wilson said airlines “domiciled around India” had survived due to Air India’s weakness, but his airline now had an opportunity to reclaim the market and transform the country into a hub for travellers.

Air India, now in the Tata Group fold, has escalated its international services to 954 a week, marking a robust annual growth of 15.5 per cent — twice the growth rate of its domestic flight network.

“More Indians are flying internationally than ever before. International sales help balance the forex costs to a large extent, and Indians have started opting for Indian carriers for simplicity and language, among other things,” Ameya Joshi, aviation analyst and founder of the aviation blog, Network Thoughts, told Business Standard. “Also, domestic expansion is not ignored, but in percentage terms, international is significantly higher than before.”

Strategic imperative

Vistara, a 51:49 joint venture of the Tata Group and Singapore Airlines, now operates 350 international services every week, showing a handsome growth of 49.6 per cent a year. In contrast, its domestic flight network saw an increase of 9.9 per cent, to 1,873 services a week.

A spokesperson for Vistara, which is in the process of merging into Air India, told Business Standard its global footprint had been intrinsic to the airline’s growth strategy. "Today, we offer direct connectivity to 18 international destinations, with approximately 35 per cent of the capacity deployed on these routes. In the last year alone, we introduced five new international destinations, including Bali, Dammam, Doha, Hong Kong, and Mauritius."

Vistara established Mumbai as a key hub for its global connectivity, resulting in a significant uptick of nearly 70 per cent in international departures over the last 12 months. "Today, Vistara connects Mumbai to a total of 14 international destinations, namely Abu Dhabi, Bangkok, Colombo, Dammam, Dhaka, Doha, Dubai, Frankfurt, Jeddah, London Heathrow, Male, Mauritius, Muscat, and Singapore," the spokesperson added. The airline on March 1 increased its frequency on the Mumbai-Heathrow and Mumbai-Singapore routes. It also plans to start five flights a week on the Mumbai-Paris route from March 28.

New wings

Akasa Air, India's newest airline, which commenced operations 20 months ago, is set to launch its inaugural international flight between Mumbai and Doha on March 28. Its expansion into international operations is expected to bolster the share of Indian carriers in the international passenger traffic market.

Akasa has received traffic rights to fly to Kuwait, Jeddah, and Riyadh. On March 21, its chief executive officer, Vinay Dube, told reporters: “We have real ambitions when it comes to international flying,” He added that the airline was interested in flying to more international destinations, such as Malaysia, Indonesia, and Vietnam. 

According to Joshi of Network Thoughts, during the next few years the share of Indian carriers in international traffic will rise, because Air India will induct more capacity and so will IndiGo, with XLR aircraft.  IndiGo, which is planning to turn itself into a significant player on long international routes, now has only economy class seats. In June 2022, its CEO at that time, Ronojoy Dutta, had told Business Standard that IndiGo was looking very closely at dual-class configuration — business and economy — for the A321XLR. The airline will start receiving A321XLR from 2024-end onwards.

In February 2023, Air India placed an order for 470 planes — 250 from the European manufacturer Airbus and 220 from Boeing. The order ranks as the world's second-largest single-tranche aircraft acquisition. In June 2023, IndiGo placed the world's largest single-tranche aircraft order for 500 planes with Airbus.

As more wings get added, they will naturally spread far and wide.