India’s aviation market will be ‘very large’ by FY30, to accommodate flag carriers from the Middle East: CAPA

The impact on competition from Gulf airlines has been a major concern for Indian carriers, but as the market is expected to be very large by FY2030, it can accommodate Indian and Middle Eastern carriers without conflicts. strategic, CAPA Advisory said on Thursday. In a post-webinar presentation, CAPA Advisory projected that by 2029-30, India’s international traffic is expected to increase by 50-60 million annual passengers from pre-COVID levels to reach 115-125 million.

Hosted by CAPA, the webinar focused on “India-Middle East Aviation Dialogue: A Win-Win Outcome is Feasible and Probable”. He said more than 30 percent of the country’s origin and destination international traffic is on long and ultra-long routes. Flagship carriers are expected to add about 70 wide-body jets by FY30, which should meet only half of the additional long-haul demand, he added.

“However, the market will be very large and will be able to accommodate Indian and Middle Eastern carriers without strategic conflicts. In fact, Indian carriers alone will not be able to meet the forecasted demand. Such a scenario would limit the economic results” , CAPA said in the presentation. .

It expects air passenger traffic to double again by 2039-40 to around 240 million passengers and continue to grow. There are reasons to be optimistic about the prospects for expansion and more aggressive competition from Indian carriers on international routes, for example the privatization of Air India, the large fleet of narrow-body long-haul aircraft and the possible relaunch of Jet.

But, supply will always fall short of demand, even based on conservative estimates, he added. Given the positive and strengthening outlook for Indian carriers, “we believe that win-win coexistence is feasible and likely. But, Middle Eastern markets must recognize that they will need to clearly articulate and tangibly demonstrate the benefits they can bring to India’s economy and tourism industry,” he said.

In particular, as Air India’s finances deteriorated, the bilateral regime became more introverted, CAPA said. “Broader strategic cooperation will be the pivot around which a more liberal approach can be considered.

“We recommend that stakeholders, such as the AACO (Arab Air Carriers Organization), the regional association of Arab airlines, take the initiative to define a new approach based on shared interests, focusing on complementarity rather than conflict,” he said.

“We believe that the government is open and responsive if a win-win strategy is presented. The successful privatization of Air India will lead to a market-based approach to India’s aero-policy, policy, regulatory and fiscal distortions. Together , these would positively reset the competitiveness of Indian aviation,” CAPA said.

Indian carriers, however, will need to compete on the global stage in terms of network and product, he said, adding that they had shown they could, despite the constraints. He added that an enabling framework would be of great help. In particular, a well-run, commercially oriented Air India has the potential to be a truly global network carrier.

CAPA recommended that access to aviation can and should be included in the broader economic and strategic cooperation between India and the Middle East, and linked to investment flows, while balancing the needs of carriers. indians. “The traditional approach to bilateral negotiations may no longer be relevant.”

He said carriers in the Middle East must also realize that under the current regime, a more tangible demonstration of the benefits that would accrue to India from increased market address is needed, as well as a clear, committed approach and transparent.

According to CAPA, contrary to India’s deepening economic and strategic partnership with the Middle East in multiple areas of interest, the airline relationship is on hiatus. Most Gulf Cooperation Council (GCC) markets exhausted their bilateral rights several years ago.

He said COVID-19 temporarily relieved the need for additional seat rights. “We believe that now is the right time to prepare a long-term strategic framework for market access that is aligned with India’s air connectivity needs to achieve its economic, commercial and strategic objectives, while keeping in mind the aspirations of Indian carriers,” CAPA says.