India is a rapidly developing nation with a population of over 1.4 billion people; according to the most recent report from the United Nations (UN), it has now overtaken China as the world’s most populous nation.
Economic Impact Research conducted by the World Travel and Tourism Council projects that India would surpass Germany to become the third largest travel and tourism country in the world. Recent announcements of significant investments in the country’s aviation sector prompted Sabre to dig into the numbers and forecast the future of Indian tourism.
Their most important results are:
Increased demand for local and international flight capacity is anticipated in response to these developments in tourism.
Domestic travel is becoming increasingly popular, and domestic capacity has already surpassed pre-pandemic levels, therefore bookings are back to 100% of pre-pandemic levels for domestic trips as of March 2023.
Indian airlines are poised for major expansion into the global market.
Despite sharp increases in international fares, passenger numbers continue to rise.
As the cost of travel decreases, more people in India’s rising middle class will be able to afford vacations; this group is projected to expand from one-third of the population in 2017 to two-thirds by 2047.
Large sums of money are being poured into India’s tourism sector in order to meet the rising demand for both domestic and foreign trips.
In order to meet the rising demand for air travel in India, major airlines like Air India, Akasa Air, and IndiGo have placed orders for hundreds more planes in the next 24 months. There were a number of initiatives announced in the Union Budget of India 2023, which was presented in February of this year, to encourage the expansion of the country’s tourist sector.
The number of airports in India is expected to rise from 148 to 220 by 2025, and the government has declared plans to invest $12 billion in aviation infrastructure renovations to accommodate capacity additions.
To further support an increase in capacity, especially for domestic travel, India is renovating and upgrading almost one hundred airports as part of the “Revival of Unserved and Under-served Airports” plan.
Domestic bookings have returned to 100% of pre-pandemic levels as of March 2023, while overseas bookings are almost at 100% of pre-pandemic levels. Domestic capacity has also surpassed pre-pandemic levels.
Sabre’s booking data shows that domestic travel recovered by 98.8 percent in January 2023, with 11 million trips as compared to 11.2 million in January 2019. Domestic tourism was at 99.3 percent in February and 107.4 percent in March, both above their levels before the pandemic. Since the beginning of this year, domestic capacity has already surpassed 2019 levels, indicating substantial growth potential for domestic travel.
Since many Indians were unable to leave the country because of the pandemic, many of them travelled within the country, contributing to the rapid expansion of domestic travel and domestic capacity.
Also, low-cost airlines (LCCs) have been on the rise in India, with several of them reporting increases in domestic traffic. More than 110% of 2019 levels of LCC domestic capacity were observed in the first three months of 2023. There were 23.2% more domestic LCC passengers in Q1 2019 compared to Q1 2018. By the same time in 2023, the figure had risen to 26.5 million, an increase of 14%.
Recovery rate for foreign tourism was 95% in January 2023, with 5.7 million departures compared to 6 million in January 2019. In January 2023, the rate of recovery was at 97.5%; by March 2023, it had risen to 99.5%. It is anticipated that by Q2 of 2019, international passenger capacity will have increased by more than 100% from 2019 levels.
It is anticipated that Indian airlines will maintain a significant role in the global transportation market.
Indian low-cost airlines (LCCs) dominate domestic routes. These days, Indian airlines are responsible for 42.7% of all overseas traffic. This is up from the 36% seen before the outbreak.
Given the aviation minister’s recent proposal for domestic airlines (traditionally Indian) to operate more long-haul routes, Indian carriers may further expand into international routes. In tandem with this drive for Indian carriers to fly long-haul routes, it was also stated that India will not increase air traffic quotas for carriers from Gulf states.
Post-pandemic, international airfares have risen.
Although average international costs are 41.3% higher than they were before the pandemic, an impressive travel recovery has been achieved as of February 2023. Because of the lengthy lockdowns and the inability to meet the pent-up demand, this is a prime example of the “revenge travel” phenomena.
As of February 2023, domestic fares were 24.5% more than they were before the outbreak. As capacity increases to meet and possibly surpass demand, along with various tourism developments, prices for tickets should level off, allowing India’s expanding middle class to more easily afford international travel.
As the cost of travel decreases, more people from India’s rising middle class—which is projected to grow from 1 in 3 in 2017 to 2 in 3 in 2047—will be able to afford vacations.
Travel is predicted to become more accessible and economical for India’s middle-class population as more Indian carriers increase domestic and international capacities and as aviation infrastructure upgrades.
The percentage of middle-class Indians is projected to grow from its current one-third to two-thirds by 2047, according to a survey that covers the entire country. In that case, the middle class in India is projected to nearly quadruple from its current number of over 500 million people to around 900 million by 2047, which is almost three times the current population of the United States. While there are over 163 million middle-class people in China, there are only about 180 million in the United States.
Brett Thorstad, VP of Sabre Travel Solutions’ Agency Sales for the Asia Pacific region, stated, “What is clear is that India is increasingly making its presence felt on the world travel stage.” All the signs, the money, and the right circumstances point to rapid expansion in the years ahead. Now, more than ever, it’s crucial that everyone involved in India’s tourism industry—and everyone who wants to break into the industry—is aware of and able to take advantage of these technological advancements.