After soaring in the domestic skies, IndiGo is looking to spread its wings on foreign routes, too. Its share in India’s international air traffic shot up to 5.8 per cent in the March 2018 quarter from about 4 per cent in the year-ago period, and 3.2 per cent in the March 2016 quarter. The airline has about 40 per cent of the domestic market.

Flying high

IndiGo’s aggressive push has had a rub-off effect on other Indian carriers, too, with airlines from the country steadily pushing to get a share of the traffic flying out of and into India — a segment that has so far been dominated by foreign airlines, mostly from West Asia.

From about 36 per cent in the March 2016 quarter, the share of domestic airlines in the international traffic rose to 38.5 per cent in the March 2017 quarter and further to 39.6 per cent in the March 2018 quarter, data from aviation regulator DGCA show. So, now, 4 out of 10 passengers flying into or out of India travel with an Indian carrier.

While IndiGo led the charge, other Indian players have not been far behind, even if some have moved at a slower pace. Air India and its allied carriers, which have built a formidable presence on international routes over the decades, saw their share go up from 16.2 per cent in the March 2016 quarter to 16.6 per cent in the March 2018 quarter. The share of another seasoned player, Jet Airways, rose from 13.5 per cent to 13.9 per cent during this period, while that of SpiceJet grew from 3 per cent to 3.3 per cent.

Set to grow

The trend looks set to continue. One, the government has been tightening the screws on bilateral agreements; this has limited the growth potential of foreign airlines in India’s international traffic.

Also, Indian carriers have ambitious expansion plans. IndiGo continues to eye the international opportunity, including long-haul routes. As in the past few years, a good portion of the planned capacity increase in 2018-19 (about 25 per cent) will likely be deployed on foreign routes.

Jet Airways’ will also continue to focus on global operations, which already contribute more than half the airline’s revenue and profit, significantly higher than for any other Indian carrier. The airline’s tie-up with strategic investor Etihad Airways should also mean continued focus on West Asian routes.

SpiceJet’s capacity deployment on international routes should rise with the induction of the Boeing 737 MAX aircraft this year. Air India’s much-sought-after international operations will likely persist, irrespective of the final contours of its restructuring.

Just last week Vistara inducted its 21st aircraft and re-iterated plan to fly international soon. The 0/20 rule that replaced the 5/20 rule — which mandates 5 years of domestic operations and a fleet of 20 aircraft for flying international — works in its favour.

GoAir is also eligible to fly abroad; recent reports say the airline is gearing up for flights to international destinations. Air Asia India, currently under the glare of investigative agencies, has overseas expansion plans that could roll out, if all goes well, in early 2019.

Besides the significant market potential (11.3 per cent y-o-y growth in passenger traffic in the March 2018 quarter), the move abroad seems to be driven by higher yields (average fares) and lower costs due to lower taxes on fuel.

Related Topics