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Low Cost travel fuels the boom in Indian airports

Exclusive analysis from CiR Business Lounge reveals promising growth in the Indian aviation market, as increased mobility and improved infrastructure sees more of the nation’s people travelling than ever before.

The 6th largest Asian country[1] in terms of international passengers, India has seen a +8.1% rise in traffic at its airports, an additional 2.3 million passengers. Only Malaysia & Japan have recorded a higher rise in international traffic.

With over 1 billion inhabitants, investment in India’s airport infrastructure for international travel has been behind other Asian countries such as China. In most cases international travel has been preceded by a domestic flight and domestic travel still accounts for around three quarters of passengers, and growing strongly. 

In May 2017, Indian airports recorded a +17.7% jump in domestic traffic meaning “India is now the world’s fastest-growing major domestic aviation market….”[2]

 

In order to keep up with demand and to further connect India’s Tier 3 & 4 cities, India has started construction on 33 new airports this year and by 2019 hopes to have between 40-50 new airports open around the country.[3]

“Aviation is an important sector of infrastructure. So improvement in air connectivity was very important to speed up the economy” – Jayant Sinha, Aviation Minister

International traffic has also been growing at India’s two major hubs for international traffic, Delhi and Mumbai, handling almost half of all passengers and growing in the first half of 2017; Delhi +10.3% & Mumbai +8.5%.

Top ten Indian Airports ranked by Int’l PAX (2016)

Growth, however, has not been restricted to Delhi & Mumbai. At airports in India’s ‘second’ cities such as Chennai, Kochi & Bangalore, passenger numbers have also risen. In the past twelve months international passenger growth at India’s next eight largest airports reached +6.5% with Kozhikode itself seeing traffic rise by +20% to over 2.3m international passengers.

Regional traffic shows dominance of MEA

India’s close political and economic ties to the UAE - approximately 2.6 million Indians currently reside within the emirate state[4] - sees the country as the number one destination for traffic out of India and half of traffic (54%) from India is destined for the MEA. The second most popular destination region for traffic out of India is APAC where traffic grew by +16% in the twelve months to June 2017. Home to three of India’s top 5 destination airports, APAC welcomed a third of India’s departing international passenger traffic. Both Singapore & Bangkok Suvarnabhumi saw arrivals from India rose by over +20% YoY whilst at Kuala Lumpur, growth has been more moderate at +2.9%.

 

 

Helping to drive growth in international traffic from Indian airports has been the rise of the Low-Cost carrier market. Still only accounting for under a fifth of departing traffic (15%) this sector has seen the highest growth at +16%.

The addition of Scoot, who began flight operations out of India in May 2016, brings the total number of LCCs now operating in the country to 11. Looking to take advantage of this growing sector, the AirAsia Group, operating three of its airlines in India, has seen passenger numbers rise by +14% to over three quarters of a million on its routes to Malaysia & Thailand.

Because “Commercial aerospace demand in India continues to grow at unprecedented rates” Boeing has predicted that, to keep up with this rising level of demand, Indian airlines will need to purchase over 2,000 new aircraft over the next twenty years just to keep pace.[5]

Looking ahead, the outlook for traffic in India is extremely positive and shows no signs of slowing. Latest forecast indicators from CiR Business Lounge for the next ten years show traffic out of India is set to rise by +86% with the country’s airports predicted to handle almost 52 million international passengers.

Commenting on the insight, CiR President, Garry Stasiulevicuis says, “India is a buoyant travel market, but has been overshadowed by it's BRIC counterparts. It's now coming to the fore and with average incomes rising by +7.4% in 2016 [6], in line with current GDP forecasts, the outlook for air travel from India looks extremely positive and is set to continue into the next decade. With this there's a renewed interest in the Indian passenger and we've got excellent new insight in our latest Indian Traveller research, a must-read for brands, retailers and operators."


[1] Based on YTD June 2017 PAX data from GTS 550 Airports – Source; CAPA
[2] http://www.traveldailymedia.com/263749/indian-air-traffic-accelerates/
[3] http://www.dnaindia.com/india/interview-75-airports-in-75-years-33-new-airports-in-just-one-year-jayant-sinha-2437545
[4] http://www.abudhabi2.com/uae-population-by-nationality/
[5] http://www.traveldailymedia.com/335071/indian-airlines-need-2100-new-jets/
[6] http://economictimes.indiatimes.com/news/economy/indicators/indias-per-capita-income-rises-7-4-to-rs-93293/articleshow/52524152.cms


NB. PAX Source: CiR Business Lounge | Advanced Analytics Tool - Data based on Scheduled departing international passengers only. Data displayed for nationalities is based on residency through place of ticket purchase