Growth in Indian Passenger Traffic

As of December 2022, global air travel has recovered to 77 per cent compared to 2019 levels and in that India is leading and transitioning to growth, Boeing highlighted while sharing their India Commercial Market Outlook during Aero India 2023. "The Indian market is recovery rapidly and its domestic capacity has exceeded 2019 levels, with domestic traffic expected to double by the end of this decade. Indian carriers will outpace global growth at nearly 7 per cent and more than 80 per cent of new airplane deliveries to this market will be for growth, while 20 per cent of new airplanes will be for replacement of aging jets. This trend exemplifies India's commitment to modernising its fleet with more sustainable and fuel-efficient next-generation airplanes," said Dave Schulte, Boeing Commercial Marketing Managing Director for Asia Pacific.

Largely driven by the strength of the domestic market, which has recovered to 98 per cent of pre-pandemic levels, India's traffic has transitioned from recovery to growth. As a result, Indian airlines will add 7 per cent more supply in the first half of 2023, compared to 2019. Due to the rapid growth of its domestic traffic, Boeing forecasts that 90 per cent of new airplane deliveries to India will be for single-aisle airplanes like the 737 MAX over the next 20 years. India will require approximately 2,210 new airplanes over the next two decades of which 1,983 units will be for single-aisle jets, while 227 units or 10 per cent of new airplane deliveries will be for widebody airplanes. Demand for commercial services to support fleet replacement valued at $135 billion.

The economy has also recovered to pre-crisis levels, Boeing stated, adding that India's economy is leading globally. According to S&P Global, the growth of tourism and India's middle class will drive:

• 4X GDP growth 2022 over 2050
• $13t GDP output by 2050
• #3 GDP world ranking by 2031

India's domestic traffic year end 2022 showed continued recovery, as per the analysis, with December 2022 noting 1 per cent more pax than in December 2019, according to Directorate General of Civil Aviation (DGCA) data. Through the end of the decade, two times growth is forecasted. Strong momentum is continuing in the domestic market, with the capacity in the first half of 2023 to 7 per cent higher than 2019 levels.

Boeing also underlined that both short-term and long-term growth continues to be strong in India with 13 per cent pre-Covid growth and 27 per cent near term recovery. The market outlook mentioned three major challenges that airlines in India face and pitched how their new-generation aircraft can help.

* Fuel –
~100 per cent higher pricing.

* Currency –
70 per cent of airline operational costs are priced in foreign currency.

* Fares –
Lowest average fares for similar distance and demands.

Boeing expects steady growth in India especially in the long haul and wide body markets. "1400+ passenger aircraft yet to be ordered by Indian airlines, 90 per cent to be 737 MAX size. 71 per cent of all international flights to/from India are 787 and 777," underlined Boeing. The outlook also touched upon freighters and highlighted that India will need 80 new and converted aircraft freighters by 2041. As for Boeing, the demand is going strong with 131 orders in 2022.

While headwinds are likely to come in the way especially given the geopolitical scenarios, overall there's a highly positive outlook that Boeing sees for the Indian market.