India Emerges as a Key Global Aviation Market
According to the latest report by the International Air Transport Association (IATA), India is fast emerging as a key global aviation market. India's domestic air travel has continued to grow robustly, and as of February, it was a mere 2.2% shy of reaching pre-pandemic levels measured by passenger revenue kilometres (PRK).
The IATA report also states that the India domestic passenger market led the rest of the domestic markets in the passenger load factor (PLF) metric in the report, which includes the US, China, and Japanese domestic markets. It has been the top domestic market measured by PLF for the last four months, achieving PLFs of 81.6% in February, 85.2% in January, 88.9% in December 2022, and 87.9% in November 2022.
With a rapidly growing middle class and rising incomes, together with the right encouragement including lower airfares, many, including airline companies, are expecting India to become the fastest-growing aviation market for years to come. Despite World Bank data showing that pre-COVID India had about 168 million air transport passengers, much lower than China, which has a similar population and had 660 million air transport passengers during the same period in 2019, the potential for growth in the Indian aviation market is significant.
Foreign airlines are also eyeing the Indian aviation market, including Singapore Airlines, which announced a USD 267 million investment into the revamped Air India following its takeover by Tata Sons, giving it a 25.1% stake in the new Air India group. This adds to the money it has already put into Vistara Airlines, which is to be merged with Air India.
Competitors IndiGo and Air India have also made world record orders for aircraft, with Air India announcing a deal for 470 aircraft, beating IndiGo's 2017 order for 420 planes, and an order by American Airlines for 460 planes in 2011. IndiGo, the largest airline in India, currently provides over 35% of all available seat kilometres on flights in and out of India's airports and almost 48% of all flights across India's international and domestic markets.
Globally, traffic is now at 84.9% of February 2019 levels, with total traffic in February 2023 based on RPKs rising 55.5% compared to February 2022. The report also highlighted that Asia-Pacific airlines had a 378.7% increase in February 2023 traffic compared to February 2022, maintaining the very positive
Singapore Airlines (SIA) has announced a USD 267 million investment in the revamped Air India group, following its takeover by Tata Sons. The investment will give SIA a 25.1% stake in the new airline, in addition to its previous investment in Vistara Airlines. SIA sees the proposed merger with Air India as an opportunity to strengthen its multi-hub strategy and bolster its presence in the Indian aviation market. The merged entity will be four to five times larger in scale than Vistara, with a strong presence in all key airline segments in India.
Etihad Airways is also planning to expand its presence in the Indian aviation market, with a focus on medium and long-haul destinations. The airline, which currently flies to cities such as Delhi and Mumbai, has identified six other Indian cities it does not serve but wants to launch flights to. Etihad's CEO, Antonoaldo Neves, has identified India as a priority market, and plans to connect it with other key destinations in China, Southeast Asia, Gulf countries, Europe, and the East Coast of the United States. The airline aims to double its fleet to 150 planes and triple its passenger numbers to 30 million annually by the end of the decade.
Under its new CEO, Etihad Airways is shifting its focus towards profitability rather than growth at any cost. Neves has emphasized that growth will only be possible with profitability, especially as the airline is now owned by Abu Dhabi's sovereign wealth fund, ADQ. The airline plans to grow organically, relying on code sharing and interline agreements, rather than mergers or equity partnerships. Neves has stated that Etihad will not fly to places where it cannot make money. The airline has identified medium and long-haul destinations as key to its expansion plans, and will avoid operating ultra-long-haul flights, where profitability is more challenging.
Important News Tags and Headlines for Readers