Airline capacity in India to reach 230 million seats in 2024: OAG

Outbound market poised for take-off
2024-05-15
/
/ New Delhi
Airline capacity in India to reach 230 million seats in 2024: OAG
Airline capacity in India to reach 230 million seats in 2024: OAG

In India, domestic airline capacity has historically grown faster than international capacity

Aviation data analyst firm OAG says that the Indian aviation market which has been amongst the fastest growing ones in the world is set to reach a seat capacity of 230 million in the current year. It adds that while the domestic market will continue to grow, the aviation capacity for outbound travel from India is set to take off.
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The Indian aviation market is set continue its rapid growth in domestic as well as international segments, says a report by aviation data analysis firm OAG, which notes that despite a global pandemic and the resulting turbulence, the Indian aviation industry has achieved stability, experienced growth, and appears to have got its house in order.

OAG

OAG says that airline capacity in India will reach 230 million departing seats in 2024, almost double where it was back in 2014, a sign that capacity growth is now back on track post-pandemic. In India, domestic airline capacity has historically grown faster than international capacity, averaging 8.7 pc growth annually from 2005 to 2024, compared to international growth of 6 pc annually.

OAG says that the difference in the growth rates is largely due to historic restrictions around the ability of foreign-based carriers to operate internationally from India and for a long time there was a requirement for carriers to operate in the domestic market first, before being permitted to operate international services.

OAG says that the potential for India in the coming decade is essentially two-fold, there is considerable opportunity for the domestic market to continue to grow and serve the world’s largest population more equitably than it currently does, and for Indian outbound services to really take off.

OAG

It adds that a testament to India’s strong domestic growth in the last decade has been Indigo, India’s homegrown low-cost carrier (LCC), which now operates just over half of all capacity in India, with 52 pc of seats in April 2024. Its share of the domestic market is largest, with 61 pc of seats, whilst internationally Indigo has 17 pc of the market in capacity terms and is second to Air India that operates 24 pc of capacity, when the capacity of Air India, Air India Express and Vistara is combined.

However, internationally other carriers dominate providing more than half of the country’s international capacity as 66 pc of all international seats are operated by carriers domiciled overseas.

OAG says that it is evident that Indigo’s focus has been on serving and growing the domestic market over the last few years and that shows no sign of abating.

OAG says that as India has now edged ahead of China to become the most populous nation in the world, the temptation to compare and contrast these markets is unavoidable. India’s largest carrier, Indigo, did just this in a recent investor relations presentation and highlighted the scale of opportunity that exists in India in both the domestic and international markets.

OAG
Compared to a mature aviation market such as the USA where there are 3 seats per head of population in the domestic market, India remains a long way behind still, with just 0.13 seats per head of population. It is also considerably behind China which is approaching 0.5 seats per head of population.

OAG says that India has unquestionably yet to fully realise its aviation potential; air capacity is just one-fifth of that in the United States, and almost four times smaller than China. Whilst Indigo and Air India have very significant aircraft orders, and Indigo cemented its international expansion plans with the announcement in mid-April 2024 of a widebody order of 30 A350-900 aircraft, the addition of these to the Indian fleet at country level will still only result in a fleet of just over 3,000 aircraft, whilst the China fleet is currently over 4,000 and growing.

Moreover, OAG adds the focus of orders is largely on short-haul narrowbody aircraft for now. However, Air India has plans to upgrade its long-haul fleet and improve the passenger experience in key markets, with 34 A35-900/1000 variants on order to add to its existing four A350-900s.

OAG says that aviation growth is typically driven by economic growth, with traffic often growing at 1.5-2 times the rate of GDP. In a mature economy such as the USA, GDP per capita is very high, averaging USD 76,400 in 2022, although this will not be evenly distributed across the population in the United States, with the average American making USD 59,400 in 2023.

OAG

In 2024, China’s GDP per capita is USD 12,720, whilst in India GDP per capita remains very low at just USD 2,410. Whilst the Indian middle class is reportedly growing, and GDP per capita is increasing, up from USD 1,500 in 2014, the pace of growth in Indian aviation will continue to be linked to the Indian economy as it transitions from a developing country.

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