- India’s aviation industry may be on a strong growth trajectory, but don’t expect India to overtake China in outbound tourism any time soon, airline industry analysts say.
- Brendan Sobie of Sobie Aviation said the South Asian country could overtake China as the world’s most populous country, but there was still a “huge gap” between the two countries’ aviation markets.
- Analysts, however, agree that there is growth potential in India’s domestic and international travel markets.
Crowds of travelers wait to check-in at the Indira Gandhi International Airport in Delhi, India, May 31, 2022.
Nurphoto | Nurphoto | Getty Images
India’s aviation industry may be on a strong growth trajectory, but don’t expect India to overtake China in outbound tourism any time soon, airline industry analysts say.
Brendan Sobie, an independent analyst at Sobie Aviation, said demand for travel to and from India is expected to grow as the country’s middle class expands and more residents travel abroad for the first time. But “don’t expect India to become a bigger outbound travel market than China anytime soon.”
The South Asian country may overtake China as the world’s most populous country, but there is still a “huge gap” between the two countries’ aviation markets, Sobie said.
“The gap between China and India is huge,” Lalitya Dhavala, a valuation consultant at travel analytics firm Cirium, told CNBC.
Although India has the world’s third-largest aviation market, “the total Chinese fleet is almost five times larger than India’s existing fleet, with an almost equal population,” she said, stressing that this “shows room for expansion”.
Furthermore, Dhavala highlighted that only 7.3% of India’s population currently holds a passport.
Analysts agree that there is growth potential in India’s domestic and international travel markets.
Compared with China, India has a larger proportion of young population, with 40% of the population under the age of 25, Dhawala said. “This is a generation on an economic upward trajectory with a growing desire and appetite to travel and explore the world.”
Statista data shows that in 2021, China’s population under the age of 29 will account for 34.12% of the total population.
China’s population is aging rapidly. Only 7% of India’s population are adults aged 65 and over this year, compared with 14% in China, according to the Pew Research Center.
Dual-career households also give households more discretionary spending power as more women enter the workforce, she added.
“India will be one of the key pillars of the global aviation industry for the next few years … India has as many stories as anyone’s,” Air India chief executive Campbell Wilson said this week when asked about India’s Is it possible for the travel industry to take over when told CNBC China.
Prime Minister Narendra Modi’s government has said it will spend $12 billion by 2025 to boost regional connectivity by building new airports and refurbishing existing ones, Reuters reported.
On Monday, the government announced more infrastructure investment in the aviation industry: increasing the number of airports, carriers and staff to keep up with the rapid pick-up in demand for travel to and from India after the outbreak eased.
“Without infrastructure investment, the risk is that there will be demand for more flights, but there won’t be enough infrastructure to handle the flights, especially in the big cities,” Sobie said.
Civil Aviation Minister Jyotiraditya Scindia said the country’s aviation industry was “entering a growth phase”. “We need to build civil aviation infrastructure and capacity and we will be able to support India’s $20 trillion economy by 2047.”
“For a while, because of Covid, we didn’t have passengers to fill the vacancies of airlines. Now, we don’t have enough planes to carry passengers,” Scindia told the CAPA India Aviation Summit in New Delhi during the week.
According to the World Economic Forum, India, the world’s fastest-growing economy, was receiving 410,000 passengers a day in 2019 before Covid hit, but has hit a new high of 456,000 passengers in recent months, according to Scindia..
He said the airport was still handling 420,000 to 440,000 passengers a day despite the high season in October.
Scindia added that passenger traffic at the country’s six largest airports is expected to increase from the current 192 million to 420 million within four years.
In anticipation of an influx of domestic and international passengers next year, national carrier Air India announced in February that it would buy 470 Boeing and Airbus planes – a decision Scindia called “the largest order in the history of international civil aviation”.
Late last year, Indian conglomerate Tata Group announced that Vistara would merge with national carrier Air India by March 2024. Vistara is a joint venture between Tata Sons and Singapore Airlines. After the merger, Singapore Airlines will own a 25.1% stake in Air India.
“The opportunity for the Indian aviation industry is huge … the growth opportunity is very, very real,” Air India’s Wilson said on Monday, adding that India’s flag carrier is focusing on growing internationally to catch up with its competition opponent.
Cirium’s Dhavala said Indian airlines are still largely focused on domestic business, with only 8% of major airlines serving international routes.
But she said she was optimistic the government would look beyond its borders, as the country aimed to be a “regional hub rather than (with flights) traversing the Middle East or Europe.”
Dhavala pointed out that the total fleet of Indian airlines is expected to double in the next 5 to 10 years, which means a growth rate of 15% in the next 8 years.
“If we can provide an uninterrupted offer of great quality, first-class service, (and) uninterrupted flight to where the Indian traveler or people going to India want to go, the opportunity is many times greater than it used to be,” Wilson said.
Correction: This story has been updated to accurately reflect China’s rapidly aging population. The error is due to an editing error.
