Spotlight on India: Growth in an Emerging Market
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- Photo: Airbus
IndiGo announced last Wednesday their plans to buy 250 Airbus A320neo aircraft. The deal with IndiGo is a huge boost for Airbus, given that just last month, they were lagging behind Boeing in sales with 791 net orders versus Boeing’s 1,000 heading into Q4. The deal will go down in history as the largest-ever single order for narrow-body aircraft and the low-cost airline has just secured rights to purchase an additional 100 of the single-aisle jets.
Growth on the Horizon
But the large aircraft order by the country’s biggest airline is not surprising if we take a closer look at the country’s plan for air travel expansion. Earlier this year, the Indian government revealed their plans to develop 200 airports in targeted areas across the country where the population can afford to fly. The development project is supported by data from the Centre for Asia Pacific Aviation (CAPA) which predicts India will experience one of the highest growth rates across the aviation industry within the next 20 years. Similarly, Airbus forecasts India’s Compound Annual Growth Rate (CAGR) at 9.9 percent between now and 2031, surpassing Domestic China, Europe and the US.
Increasing Competition
No one doubts India’s air market expansion prospects. With the recent investment by Etihad in Jet Airways, the expansion to new routes by Air Asia India, and ‘new kid on the air market block’ Vistara (partly owned by Singapore Airlines), it’s clear that the growth in India’s air travel sector is bullish despite the challenge the market has posed for many domestic airlines (including the once profitable but now defunct Kingfisher Airlines).
“IndiGo is the only airline in India which has been consistently profitable for each of the last four consecutive years,”
CAPA said in its latest India Aviation Outlook.
But although IndiGo currently owns more than 32 percent of domestic marketshare, it’s recent investment with Airbus only serves to underline that much of the India market remains untapped, and it won’t be long before external competition closes in.