India’s airline industry may be on a strong growth trajectory but don’t expect India’s outbound travel to overtake China’s soon, aviation analysts say.
Travel demand to and from India is expected to grow as the country’s middle class expands and more residents travel abroad for the first time, Brendan Sobie, an independent analyst at Sobie Aviation said. But “don’t expect India to be a bigger outbound market than China anytime soon.”
The South Asian nation may be set to overtake China as the world’s most populous country, but there remains a “massive gap” between their aviation markets, Sobie said.
“The gap between China and India is huge,” Lalitya Dhavala, valuations consultant at travel analytics firm Cirium told sources.
Although India has the world’s third largest aviation market, “China’s total fleet is almost five times the existing Indian fleet, for an almost equal population,” she said, highlighting it was “indicating room for expansion.”
In addition, only 7.3% of India’s current population holds a passport, Dhavala highlighted.
The analysts agree there’s potential for growth in India’s domestic and international travel market. In comparison to China, India has a larger share of young adults, with 40% of its population under 25 years old, Dhavala said.
“This generation is on a rising economic trajectory with a growing desire and appetite to travel and explore the world.” According to data from Statista, those under 29 years of age made up 34.12% of China’s population in 2021.
China has a rapidly rising aging population. Only 7% of India’s population this year comprised of adults 65 years and older, compared with 14% in China, data from the Pew Research Center showed.
With more women entering the workforce, a dual-income household would also give families more discretionary spending power, she added.
“India is going to become one of those key pillars of global aviation, and the next few years … is India’s story as much as anyone’s,” Air India CEO Campbell Wilson told CNBC this week when asked if India’s travel industry could potentially overtake China’s.
Prime Minister Narendra Modi’s government said it will be spending $12 billion by 2025 to boost regional connectivity by building new airports and renovating existing ones, sources reported.
On Monday, the government announced more infrastructure investments for the aviation sector: to increase the number of airports, carriers, and staff to keep up with the travel demand to and from India which picked up rapidly after the pandemic eased.
“Without infrastructure investments, the risk is there would be a demand for more flights but not enough infrastructure to handle the flights, particularly in major cities,” Sobie said.
The country’s aviation sector is “entering its growth phase,” said Civil Aviation Minister Jyotiraditya Scindia. “We need to put in place the civil aviation infrastructure and capabilities [so] that by 2047, we will be able to support a $20 trillion dollar economy within India.”
