International air expansion will be the main focus for 2024

Indian aviation is set to witness a massive gameplay in the international segment in 2024, according to aviation consultancy firm CAPA India.

Market leaders IndiGo and Air India will shift focus gears to the international segment. On the one hand, IndiGo, which is dominating the domestic market, will target a leadership market share in international flights, exploring A320neo/A321neo expansion and possibly placing a widebody order. 

Expansion plans

IndiGo has expanded its destination count from 100 to over 115, with plans to add three more, including Bali, Medina and Ayodhya. It currently serves 85 domestic and 32 international destinations, with several new destinations added in the past year. Additionally, IndiGo has entered into codeshare agreements with eight international airlines, including British Airways, Qantas and Turkish Airlines, expanding its global reach.

In a recent interview, Pieter Elbers, CEO of IndiGo said that IndiGo’s strategy is to turn into a “global airline”. 

“IndiGo’s speculated widebody order, if it materialises, may be to ensure both that IndiGo participates in the large international long haul market and that Air India does not have exclusivity in the long haul market. This could be a trigger for the induction of widebodies by Air India Express for long haul operations in the near-term,” CAPA India said.

Full-service carrier, Air India’s first six A350s, expected to be deployed on international routes from Summer 2024, will join the airline’s existing fleet of leased 777s. This will also trigger international carriers seeking additional capacity deployment. Air India added seven new international destinations, including Phuket in 2023.

Aviation dynamics

CAPA India’s report stated that as IndiGo may place a widebody aircraft order. This move will trigger Air India express “the induction of widebodies for long haul operations in the near-term.”

In an interview with this paper, Campbell Wilson, CEO and MD of Air India, that Air India too, like IndiGo, which is rapidly expanding in tier 2 markets to have a robust network, needs to expand its network to those cities. “We need to do the same. As we get incremental aircraft. We need to expand in terms of length and breadth in a way which can support connectivity and distribution between the full service and the low-cost carrier both domestically as well as internationally to expand seamless connectivity.”

On the policy front, the government is likely to relax the bilateral policy in H2 of 2024, “as extending the freeze beyond that will possibly exacerbate aero-political and trade tensions,” it said.

“We estimate that foreign carriers are seeking an additional 150,000 seats per week in the near term, but we expect that liberalisation will be gradual to begin with. The extent of opening up will be the key theme to watch,” the report stated.

CAPA India estimates that Western European airlines are expected to both upgauge and launch new services to India. This will be to compete with Air India’s expansion and enhanced proposition, as well as to take advantage of North American traffic given that US and Canadian carriers continue to be impacted by Russian airspace closures.

As a result, Gulf carriers are expected to allocate a greater share of their India capacity for North American and European traffic, despite their seat constraints at an overall level.

Airfares on international routes are expected to normalise to a significant extent towards pre-Covid levels from January 2024, in economy class and especially in premium classes. Historical season variations will remain. The extent of normalisation in premium cabins will be closely watched.