Airlines poised to dominate international air passenger traffic: CRISIL

International air passenger traffic: Indian airlines are projected to seize a significant chunk, potentially up to half, of the nation's international air passenger traffic by the fiscal year 2027–28, according to CRISIL, a leading credit ratings agency, as reported by PTI.

CRISIL's report indicates a surge in the share of Indian carriers in international passenger traffic, including originating, terminating, and transit journeys, expected to escalate by 700 basis points to approximately 50 per cent by 2027–28, up from 43 per cent in the preceding fiscal year. The forecast attributes this growth to airlines' deployment of additional aircraft and expansion into new international routes, capitalising on their domestic connectivity, which outshines that of their foreign counterparts.

Highlighting the profitability of international operations compared to the domestic segment, CRISIL Ratings anticipates a bolstering of the business profiles of Indian carriers with the surge in their international market share.

According to CRISIL, international passenger traffic rebounded impressively to approximately 70 million in fiscal year 2024 from a pandemic-induced low of 10 million in fiscal year 2021, surpassing pre-pandemic levels.

Manish Gupta, Senior Director and Deputy Chief Ratings Officer at CRISIL Ratings, remarked on the evolving spending patterns post-pandemic, attributing the surge in international travel to factors such as rising disposable incomes, relaxed visa requirements, the proliferation of airports, and enhanced air travel connectivity.

CRISIL forecasts a robust compound annual growth rate (CAGR) of 10–11 per cent in international passenger traffic over the next four fiscal years, a stark contrast to the 5 per cent CAGR witnessed in the four years preceding the pandemic.

The report underscores Indian airlines' proactive measures in expanding their international footprint, citing the addition of 55 new international routes over the past 15 months. These routes include direct flights from additional cities to popular long-haul destinations in the United States, Europe, and Australia, streamlining travel logistics and eliminating layovers.

Ankit Kedia, Director at CRISIL Ratings, emphasised Indian airlines' investments in widebody and long-range narrow-body aircraft, coupled with network expansion strategies, as pivotal drivers for capturing a larger market share in the international segment. The planned fleet additions and network expansions could propel Indian airlines to achieve a robust CAGR of 14–15% in the international arena over the next four fiscal years, ultimately culminating in a 50% market share.

CRISIL's analysis underscores the innate advantages enjoyed by Indian airlines in dominating the nation's international air passenger traffic, owing to their superior domestic connectivity, end-to-end international connectivity from tier 2 and tier 3 cities, and India's strategic geographical location facilitating air connections between the EMEA and Asia Pacific regions.

(with PTI inputs)