India’s Outbound Travel Market Won’t Overtake China Anytime Soon: Analyst

Aviation analysts say India’s aviation industry may be on a rampage – but don’t expect India’s outbound tourist arrivals to overtake China’s anytime soon.

Demand for travel to and from India is expected to increase as the country’s middle class expands and more residents travel for the first time, said Brendan Sobie, independent analyst at Sobie Aviation. foreign calendar. But “don’t expect India to become a bigger outward-looking market than China any time soon.”

South Asian country can be set up to Overtakes China to become the most populous country in the worldbut there is still a “huge gap” between their airline market, Sobie said.

“The gap between China and India is huge,” Lalitya Dhavala, valuation consultant at travel analytics firm Cirium told CNBC.

Although India has the world’s third-largest aviation market, “China’s total fleet is almost five times that of India’s current fleet, with almost the same population,” she said, noting that “extendable”.

In addition, only 7.3% of India’s current population has a passport, Dhavala emphasized.

According to data from Statistical staffPeople under the age of 29 make up 34.12% of China’s population in 2021.

China has a rapidly growing aging population. Only 7% of India’s population this year includes adults aged 65 and over, compared with 14% in China, data from Pew Research Center shows.

With more women entering the workforce, she added, a dual-income household would also give families more discretionary spending power.

“India is set to become one of the key pillars of the global aviation industry, and in the next few years… India’s story as well as anyone’s,” said Air India CEO Campbell Wilson. told CNBC this week when asked if India’s tourism industry is likely to pull through. of China.

Prime Minister Narendra Modi’s government has said it will spend $12 billion by 2025 to strengthen regional connectivity by building new airports and renovating existing ones. Reuters reported.

On Monday, the government announced more infrastructure investments for the aviation sector: increasing the number of airports, airlines and staff to meet rising demand for travel to and from India. quickly after the pandemic subsided.

“Without infrastructure investment, the risk is that there will be more flights but not enough infrastructure to handle flights, especially in big cities,” Sobie said.

Civil Aviation Minister Jyotiraditya Scindia said the country’s aviation industry was “entering a growth phase”. “We need to build civil aviation infrastructure and capacity [so] that by 2047 we will be able to support the $20 trillion economy in India.”

“There are times when there are no guests to fill up [the] airlines due to Covid. Right now, we don’t have enough aircraft to carry passengers,” Scindia said during the CAPA India Aviation Summit in New Delhi earlier in the week.

India, the fastest growing economy in the world according to the World Economic Forumpicked up 410,000 daily passengers in 2019 before Covid hit — but that number has hit a new high of 456,000 passengers in recent months, Scindia claims.

He said that although the peak season in October has passed, airports still receive between 420,000 and 440,000 passengers per day.

Scindia added that passenger capacity at the country’s six major airports is expected to grow to 420 million in four years from 192 million currently.

With the expectation that the number of domestic and international passengers will increase sharply next year, the national airline Air India announced in February that it will buy 470 Boeing and Airbus aircraft — a decision that Scindia calls “the largest order in the history of international civil aviation.”

Late last year, Indian conglomerate Tata Group announced that Vistara will merge with national carrier Air India before March 2024. Vistara is a joint venture between Tata Sons and Singapore Airlines. After the merger, SIA will own a 25.1% stake in Air India.

“The opportunity for Indian airlines is huge… the growth opportunity is very, very real,” Air India’s Wilson said on Monday, adding that India’s flag carrier is focusing on focus on international development to catch up with competitors.

Dhavala from Cirium says Indian airlines remain largely focused on their domestic operations, with only 8% of major airlines offering international routes.

But she said she is optimistic the government will look beyond its borders as the country aims to become a “regional hub rather than a hub”. [having flights] flows through the Middle East or Europe.”

Dhavala noted that the total fleet of Indian airlines is expected to double over the next five to 10 years, which equates to a growth rate of 15 percent over the next eight years.

“If we can deliver a continuous proposition of great quality, great service, [and flies] relentlessly going into places that Indian tourists or Indian travelers want to go, the opportunity is many times greater than before,” Wilson said.

Correction: This story has been updated to accurately reflect that China has a rapidly growing aging population. The mistake is due to an editing error.