What's Driving International Gains For Indian Airlines?

08.05.2024 - 07:23 / skift.com / Air India / Akasa Air / Bulbul Dhawan

Indian airlines will account for half of the country’s international passenger traffic by the 2027-28 financial year, according to a report by credit rating agency CRISIL Ratings. That’s up from 43% this fiscal year, with India’s international passenger traffic at around 70 million.

What’s driving the growth? According to Manish Gupta, senior director at CRISIL, there has been a noticeable shift in spending patterns post-Covid. He said there is an increasing inclination of Indians towards international leisure travel. Skift Megatrends also noted that the spending power of the Indian middle class is likely to significantly impact the growth of the global travel industry. 

Gupta said, “Increasing disposable incomes, easing visa requirements, growing number of airports, and enhanced air travel connectivity are boosting international travel. The government’s focus on making India a hub for tourism is also expected to provide a fillip to inbound traffic.” According to him, this is likely to lead the international passenger traffic to annually grow at 10-11% over the next four years versus 5% pre-pandemic. 

How are Indian carriers responding? Speaking at the Skift India Summit, Air India CEO Campbell Wilson said that the carrier, which had already placed an order for 470 aircraft, is taking a new aircraft every six days. 

India’s largest carrier IndiGo, which recently placed its first-ever order for widebody aircraft, plans to offer nonstop connectivity from major Indian airports to global destinations.

The Indian aviation minister had also urged domestic carriers to fly long haul and help establish new hubs.

CRISIL highlights several factors that are playing in favor of Indian airlines.

The hospitality and tourism industry has witnessed a surge in hiring in April 2024, according to a report by job search platform Naukri.com. The strong momentum in the tourism sector led to a 16% growth in hiring as compared to April 2023. There has been a high demand for positions such as front office managers, housekeeping supervisors, and food and beverage service professionals, especially in urban hubs like Delhi, Mumbai and Bangalore. 

“While the overall Index is flat, the new financial year is off to a positive start with remarkable hiring growth recorded in hospitality,” said Naukri.com chief business officer Pawan Goyal. 

The Indian hospitality industry is witnessing a significant expansion in the country. Marriott International has recently opened its 150th property in India. Indian Hotels Company (IHCL) has more than 90 hotels in its pipeline. Sarovar Hotels, which is among the fastest-growing Indian hotel chains, also has a pipeline of 70 to 80 hotels. 

In June, United Arab Emirates’ flag carrier Etihad Airways