Foreign airlines tighten grip on overseas passenger traffic
The void created by the exit of Jet Airways, which was the largest Indian carrier in the international aviation market with a share of 15% in total and 40% among Indian carriers, was filled by foreign carriers.
India’s civil aviation market may be the third-largest in the world, but foreign airlines have consistently dominated the overseas passenger traffic. Reason: Lack of direct connectivity options, shortage of full-service carriers, below-par customer experience and service quality.While short-haul international destinations like the West Asia and Southeast Asia are being covered by low-cost carriers (LCCs) such as IndiGo and SpiceJet as well as full-service ones, long-haul destinations in Europe, Australia and North America are being serviced by only Air India and Vistara.
The void created by the exit of Jet Airways, which was the largest Indian carrier in the international aviation market with a share of 15% in total and 40% among Indian carriers, was filled by foreign carriers.The situation is showing no signs of improving. According to DGCA data, Indian carriers flew 21 million passengers in 2022, having a share of 45%, the lowest since 2019. Foreign carriers served 26.26 million passengers with a share of 55%.As compared to 2022, India’s international civil aviation market recorded a steep jump in the March quarter of 2023, bringing it close to the 2019-level.
At an annualised level of 60 million passengers, based on 15.17 million recorded in January-March, the market will be close to the pre-Covid-level of 64.18 million.Manvi Hooda, practice lead – consulting and research, CAPA, said, “The growth in the last 10 years has largely been driven by Indian LCCs. Despite this, there remains a considerable untapped potential for Indian carriers to expand into the international markets. Notably, long- and ultra-long-haul markets such as Europe, North America and Australia represent highly attractive prospects.
”IndiGo, which has a market share of 57% in India’s domestic circuit, is one of the largest carriers in the world. But, the brand is largely unknown in Europe, which it connects with the help of its partner Turkish Airlines through a code-share agreement. IndiGo recently put to use two leased twin-aisle B777s.Speaking to analysts, Pieter Elbers, CEO, InterGlobe Aviation, said: “In general, international routes have a somewhat lower cost per unit. International operations are doing better than domestic operations (for IndiGo). We will be opening Nairobi and Jakarta this summer. We are looking at Central Asia, too.”“We have close to 25% of our capacity deployed internationally and we hope to increase this to 40% by the end of the next year with more aircraft joining the fleet. Overall, we have been witnessing a consistent growth in passenger traffic across our international network, especially on the long-haul routes,” said a Vistara spokesperson.
A substantial part of international traffic continues to travel via offshore hubs in the West Asia or Asia. For instance, Emirates had a 9.2% share of total international traffic in the March quarter, but the majority of its passengers were travelling via Dubai to other destinations. To compete effectively, Indian carriers need to enhance their presence in the international market by offering non-stop connectivity to more destinations, CAPA India said.Air India has placed orders for several wide-body aircraft earlier this year. Among them is the Airbus A350 with deliveries later this year. Akasa Air, India’s newest airline, plans to commence international flights before the end of this year. “A diverse network strategy is needed. By introducing more non-stop capacity, Indian carriers can capture market share from their competitors. Having a ‘fit for network’ fleet is key. The induction of long-haul, narrow-body equipment will provide Indian carriers with the flexibility to operate diverse short and medium-haul international missions,” said Hooda.