India's airline industry is on a positive growth track, but aviation analysts don't believe India's outbound travel will surpass China's.
According to Brendan Sobie of Sobie Aviation, an independent analyst, travel demand from India will increase as more Indians travel abroad. However, India is not expected to become a larger outbound market than China in the near future.
Sobie stated that while South Asia may soon surpass China as the world's largest country, there is still a "massive gap” between their aviation markets.
CNBC's Lalitya Dhavala, valuations advisor at Cirium, stated that "the gap between China and India was huge."
India is the third-largest aviation market in the world. However, China's total fleet is nearly five times that of India's, which she stated was "indicating potential for expansion."
Dhavala also highlighted that only 7.3% Indians have a passport.
India's strong growth trajectory
Analysts agree that India's domestic as well as international travel market has potential growth.
Dhavala stated that India has a higher percentage of young adults than China. India's population is 40% younger than China. "This generation is on an upward economic trajectory and has a growing desire to travel the world and explore it.
Statista data shows that China's population under 29 years old accounted for 34.12% in 2021.
China is experiencing a rapid increase in its population. According to data from Pew Research Center, only 7% of India's population is 65-years-old or older. This compares with 14% in China.
She added that dual-income households would give families more discretionary spending power because of the increase in women entering the workforce.
When asked by CNBC if India's tourism industry could surpass China's, Air India CEO Campbell Wilson stated that India is on track to be one of the key pillars in global aviation.
Shot in the arm to support infrastructure
The government announced Monday more infrastructure investments in the aviation sector. These include an increase in the number of aircraft, airlines, and staff to meet the growing demand for travel to and from India, which has been increasing rapidly since the pandemic.
Sobie stated that without infrastructure investments, there is a risk of more flight demand but not enough infrastructure to handle them.
Jyotiraditya Skindia, Civil Aviation Minister of India, stated that the country's aviation sector "is entering its growth phase." "We must put in place civil aviation infrastructure and capabilities so that we can support an Indian economy worth $20 trillion by 2047."
India is on its way to becoming an important pillar of global aviation: Air India CEO
Covid meant that at one time, there were no passengers to fill the airlines. Currently, we don’t have enough planes to fly our passengers," Scindia stated at the CAPA India Aviation Summit in New Delhi.
According to the World Economic Forum India is the fastest-growing country in the world. It received 410,000 passengers per day in 2019, before Covid arrived. However, this number has risen to 456,000 passengers in recent months according Scindia.
He said that even though October is now the peak season, airports still welcome between 420,000 and 440,000 passengers each day.
Scindia said that the passenger capacity at six of the country's major airports will increase to 420million in four years, from the current 192million.
Beyond India's borders
Air India, a national carrier, announced in February that it would be purchasing 470 Boeing and Airbus aircraft in anticipation of an increase in passengers. This decision was hailed by Scindia as the "largest in international civil aviation history."
In late 2017, Tata Group, an Indian conglomerate, announced that Vistara would merge with Air India's national carrier by March 2024. Vistara is a joint venture of Tata Sons Airlines and Singapore Airlines. SIA will now own 25.1% Air India after the merger.
Air India's Wilson stated Monday that Indian aviation has a huge opportunity and the potential for growth. He also said that India's flag carrier, Air India, is focusing on international expansion to catch up with its rivals.
According to Dhavala of Cirium, Indian airlines remain largely focused on domestic operations. Only 8% of major Indian airlines offer international routes.
She said that she is optimistic about the government's ability to look beyond its borders, as it aims to be a "regional hub" rather than sending flights through Europe or the Middle East.
Dhavala stated that India's total fleet is expected to increase by 15% over the next eight years.
Wilson stated, "If we can offer nonstop propositions that are of great quality and great service [and] fly nonstop to the places Indian travelers or Indian tourists want to visit, the opportunities are many fold larger than they have been in the past."