Two different flight paths: Air India is fortifying its domestic network while IndiGo is going big on international

Two disparate strategies, as different as chalk and cheese, adopted by the country’s two largest airlines, are playing out in Indian skies.
IndiGo, India’s largest carrier by fleet and market share, has been focussing on international expansion in the past year. IndiGo announced seven new international destinations and added additional widebody aircraft on damp lease--an agreement in which an airline leases aircraft, maintenance, and some of the flight crew to another.

The Tata group-owned Air India and Air India Express, have been transferring domestic routes, adding new destinations in India, and fortifying its presence across the country.

So, why is IndiGo betting big on international and Air India on domestic expansion? The proof lies in numbers. After folding four airlines into two, the Tata Group is fancying its chances to challenge IndiGo’s dominance in India. Air India has already taken the lead in India's top two metro routes, overtaking IndiGo.

IndiGo’s international focus

In 2024, Indian carriers operated 199,349 international departures. The Tata group operated up to 53% of those, while IndiGo operated 40%. However, the numbers change drastically when one looks at capacity by Available Seat Kilometer(ASK), where the Tata group has 67% capacity share.

Capacity by ASK is the accurate measure of aviation, and Air India's long-haul network gives it a higher capacity share. Capacity by ASK is derived by multiplying the available seats in the plane with the distance of flight in kilometers. Thus, a widebody aircraft flying nonstop to North America has larger ASKs than a narrowbody aircraft flying to neighbouring countries.

Until the merger, IndiGo had higher departures and more passengers than Air India. The merger and close coordination between Air India and Air India Express has set the Tata group a step above IndiGo. The focus for IndiGo is twofold.

First, bilateral rights are essential for flying internationally, unlike domestic routes. Once exhausted, the wait can be long until they are renegotiated or an airline winds up, as with Jet Airways or Go First.

Secondly, the falling rupee has put extreme pressure on airlines' finances, especially those with many expenses marked to the US Dollar. With international services, the airline gains access to foreign currency, and the settlement helps somewhat negate the sliding rupee's effects.

IndiGo definitely read the tea leaves and moved swiftly to first order the Airbus A350s and later look for options in the intermediate term. IndiGo also has the second mover advantage, of perfecting what Air India tries in terms of transfers, apart from additionally benefitting from all the hard work that Air India and airports put in to set up a good hub in India.

Tata Group’s domestic focus

IndiGo closed January with a domestic market share of 65.2%. The four Tata group airlines combined had a higher joint market share in September before the mergers started, than in January. IndiGo’s aggression and focus have been unabated even as Air India Express continued adding planes and flights, breaking IndiGo's monopoly one at a time, and strengthening operations at Hyderabad, Kolkata, and Chennai.

Nearly 90% of IndiGo passengers are from the domestic market, and the airline has reported record profits on the other side of the pandemic. Air India and its much-talked-about turnaround cannot happen in isolation or only with an international focus, where the competition might be lesser than domestic, but so are the volumes. No wonder then that the Tata group is pushing Air India Express as the flag bearer, with its lower unit cost and low-cost offering to take on IndiGo on domestic routes.

Tail Note

Compared to last April, Air India Express (with AIX Connect) has grown 45% by departures in Indian skies. Its international growth was 19.5% by departures and 19.7% by ASK. For IndiGo, the international growth was 30.7% by departures and 29% by ASK, while the domestic growth was 8.8% by departures, according to data shared by Cirium, an aviation analytics company, exclusively for this article.

As the airlines chase their respective goals, there will be many overlaps where IndiGo chases Air India Express and Air India on certain international routes and Air India Express breaks the monopoly for IndiGo’s domestic bastions. Who will benefit? Hopefully, the passengers who have been paying, irrespective of the costs, which have only gone up post-pandemic.