India has also been predicted to overtake Germany to become the world’s third biggest travel and tourism country by the World Travel and Tourism Council’s Economic Impact Research. With major aviation developments in the country announced recently, Sabre has sifted through data to examine the potential of India’s travel growth, and what we may see in the coming years.
Our key findings include:
- Significant investments in the tourism industry are expected to increase, and support, airline capacity requirements for domestic and international travel.
- As of March 2023, bookings are back to 100% of pre-pandemic levels for domestic trips and are at nearly 100% of pre-pandemic levels for international trips, with domestic travel increasing in popularity and domestic capacity having already exceeded pre-pandemic levels.
- Indian carriers are expected to play a significant role in international travel.
- Passenger numbers are increasing despite significantly higher international fares.
- The growing middle-class segment in India is expected to gain access to travel as travel becomes more affordable; the middle-class segment is expected to double from one in three to two in three Indians by 2047.
Significant investments in the Indian tourism industry are expected to increase and support capacity requirements for domestic and international travel
Major plane orders by Air India, Akasa Air and IndiGo are expected to result in close to 1,200 more aircraft for Indian carriers over the next 24 months to support the growing demand for travel. The Union Budget of India 2023 presented in February this year, also announced a series of developments to support potential tourism industry growth.
A $12 billion investment was announced for aviation infrastructure upgrades to support capacity increments, with aims to increase the number of airports in India from 148 to 220 by 2025, alongside more aviation schools to prepare for increased demand for pilots.
India is also refurbishing and developing nearly 100 airports, under the “Revival of Unserved and Under-served Airports” programme, aimed at making air travel more affordable and accessible, while further supporting an increase in capacity, especially for domestic travel.
As of March 2023, bookings are back to 100% of pre-pandemic levels for domestic trips and are at nearly 100% of pre-pandemic levels for international trips, with domestic capacity having already exceeded pre-pandemic levels
Sabre’s booking data shows that in January 2023, there were 11 million domestic trips, versus 11.2 million in January 2019, showing a travel recovery of 98.8%. In February, the domestic travel measured at 99.3% and eventually exceeded pre-pandemic levels in March at 107.4%. In fact, domestic capacity has already exceeded 2019 levels since the beginning of this year, signifying that there is potential for domestic travel to grow significantly.
The strong growth for domestic travel and domestic capacity could be attributed to more Indians having turned towards domestic travel during the pandemic when they couldn’t travel further afield, and ongoing improvements in connectivity due to government investments.
In addition, India has seen a rise in low-cost carriers (LCCs) recently, with these carriers recording growth in domestic travel. Domestic capacity for LCCs has been recorded at more than 110% of 2019 levels in the first 3 months of 2023. In Q1 of 2019, there were 23.2 million travellers flying on LCCs for domestic routes. The number increased to 26.5 million within the same period in 2023, an increase of 14%.
For international travel, there were 5.7 million trips in January 2023, versus 6 million in January 2019, showing a recovery rate of 95%. The recovery rate increased to 97.5% in February 2023 and is now at 99.5% in March 2023. Capacity for international trips has also been planned to exceed 100% of 2019 levels by Q2.
Indian carriers are expected to continue to play an important role in international travel. Domestic routes are predominantly served by Indian low-cost carriers (LCCs). Indian carriers now serve 42.7% of all international routes. This is an increase from 36% pre-pandemic.
Indian carriers could further grow in international routes, given a recent request by the aviation minister for domestic carriers (historically Indian) to fly more long-haul routes. It was also reported that India will not be increasing air traffic quotas for carriers from Gulf states, in line with this push for Indian carriers to fly long-haul routes.
International fares have increased post-pandemic
An impressive travel resumption has been achieved even though average international fares are 41.3% more expensive as of February 2023 when compared to pre-pandemic prices. This exemplifies the “revenge travel” phenomenon resulting from the long lockdowns, plus the fact that capacity could not catch up with the pent-up demand.Domestic fares have also increased, with fares at 24.5% more than pre-pandemic prices as of February 2023. Fare prices are expected to stabilize as capacity grows to meet and potentially exceed demand, coupled with various tourism investments aimed at making travel affordable for the growing middle-class segment in India.
The growing middle-class segment in India is expected to gain increased access to travel as travel becomes more affordable; the middle-class segment is expected to rise from 1 in 3 to 2 in 3 Indians by 2047.
As more Indian carriers add domestic and international capacities, alongside aviation infrastructure upgrades, it is expected that travel will become more accessible and affordable for India’s middle-class population, encouraging them to travel.
A pan-India survey has reported that currently, one in three Indians is considered middle-class, and the number is expected to increase to two in three by 2047. In that event, the sheer population size of India means that middle-class in India would be expected to almost double from nearly 500 million people to 900 million by 2047, almost 3 times the population of the US. In the US, the middle-class makes up only 50%, around 180 million, and China, 163 million, where they make up 13.7%.
“What is clear is that India is increasingly making its presence felt on the world travel stage,” said Brett Thorstad, Vice President, Sabre Travel Solutions, Agency Sales, Asia Pacific. “All the indicators, the investment, and the conditions are there for substantial growth over the coming years. What is important now is that all players in the Indian travel ecosystem, and those who want to be players in the marketplace, understand and can harness these opportunities through advanced technology.”
*Source: PATA, Level 26, Gaysorn Tower, 127 Ratchadamri Road, Lumpini, Pathumwan Bangkok 10330 Thailand communications@PATA.org
No comments:
Post a Comment