The silent rise of Indian airlines in overseas routes

Experts say this trend is here to stay even as airlines focus on adding capacity to international routes to cater to rising demand.

As per data from DGCA (Directorate General of Civil Aviation), foreign carriers accounted for 56% share of the 54.4 million international passenger traffic to and from India in FY23, and Indian carriers held 44% share. Comparatively, in FY20 (pre-pandemic), their respective shares were 62.4% and 37.6%. In the current fiscal (April-January), domestic carriers have so far garnered 44.3% share of international traffic from India.

Among individual airlines, Tata Group-backed Air India and Air India Express hold a cumulative share of 19.9%, the highest in international air traffic to from India. This is followed by IndiGo at 15.7% share and Vistara with 2.4%. Emirates is the biggest foreign airline flying passengers to and from India with a share of around 10%.

"We continue to see immense potential for further growth as Indian carriers take centre stage for international travel," an IndiGo spokesperson said. “We are aiming to double in size by the end of 2030, thus, transforming IndiGo from being a domestic-focused carrier."

IndiGo, India’s largest carrier, has increased its international seat capacity by 47% year-on-year (y-o-y) in the October-December quarter. The airline, which currently serves 87 domestic and 33 international destinations, has seen 27% growth y-o-y in scheduled international flight passengers this January, and 38% compared to January 2020. Domestic growth has been 16% and 29% over the same period.

Online travel portals say there has been a conscious attempt by Indian airlines to expand their international footprint. Passengers are also preferring Indian carriers for some overseas routes.

“We anticipate Indian airlines to secure a majority share, exceeding 50%, on international routes within the next few years," Nishant Pitti, chief executive officer and co-founder, EaseMyTrip said, which currently sees Indian carriers bagging nearly 30% of its platform’s international bookings.

"Indian airlines are gaining popularity among travellers primarily due to their competitive airfares vis-à-vis those offered by international carriers," a spokesperson of online travel portal Yatra.com said, adding that there has also been a significant surge in domestic flights operated by domestic airlines.

Meanwhile, Tata Group-backed Air India has seen a 23% y-o-y increase in international air passenger traffic this January and 18% compared to January 2020. For the entire Air India umbrella airlines including Air India Express and AirAsia India, the cumulative international growth rate has been higher at 21% and 13% since January 2023 and January 2020, respectively, compared to domestic growth rate of 15% and 10%.

“Indian carriers have started to give priority to international destinations," said Jagannarayan Padmanabhan, senior director & global head, consulting, CRISIL Market Intelligence and Analytics. “The Air India group has closed operations in some loss-making domestic routes and has made international flights a priority. On the other hand, IndiGo has started to operate direct flights to many African, European and Southeast Asian countries."

Padmanabhan added that this trend is expected to continue with international tourism gaining traction among Indians. “In absolute terms, domestic will continue to dominate but we can see a distinct growth coming in from international markets," he said. For context, of India’s total air passenger traffic of 327.3 million in FY23, 83% flew domestic and the rest, international.

While the growth on international segment has been largely led by IndiGo and Air India, the highest growth rate has been recorded for full-service carrier Vistara, largely on account of a low-base effect. The airline, which began international flights in 2019, grew 65% and 571% in January 2024, compared to the same month in 2023 and 2020. The corresponding domestic growth rate in the same periods has been 18% and 57%, respectively.

“Expanding our global footprint has always been intrinsic to our growth strategy. We strategically built Mumbai as a vital hub for our global connectivity, which has witnessed an increase of nearly 70% in international departures in the last 12 months," a Vistara spokesperson said. “With more aircraft joining our fleet this month, we will continue to evaluate new opportunities to add more viable routes/ destinations to our network." Currently, the airline has deployed 35% of its capacity to connect 18 international destinations.

International segments are more lucrative on account of stable cash flows, higher revenue per passenger compared to domestic routes, and see a push as more countries offer benefits like visa on arrival, e-visa among others for Indian tourists, according to ratings agency ICRA.

“The growth in international passenger traffic will attract domestic airline players to capture the growing market in that segment. The international passenger traffic for Indian carriers surpassed the pre-covid levels in FY2023, although it trailed the peak levels of 25.9 million witnessed in FY2019. It is expected to cross this level in the current fiscal, with an estimated 25-27 million passengers, representing a y-o-y growth of 7-12%. The same is expected to further grow by 7-12% to 27-29 million in FY2025," Suprio Banerjee, vice president & sector head - corporate ratings, ICRA Limited said.