Last month at the Paris Airshow, India’s budget airline IndiGo placed an order of 500 A320neo aircraft from Airbus, making the multibillion-dollar deal the largest by a single carrier in civil aviation history. Earlier in the year in February, the newly privatized Air India had placed an order of 470 narrow and widebody jets from both Boeing and Airbus.
The two airlines have a combined domestic market share of 81.3% in 2023 with IndiGo ferrying 56.2% of the country’s passengers and Air India flying 25.1%. While the former’s share in the country’s domestic market has steadily increased over the last 15 years, the latter’s share received a boost after the Tata group took control of it early last year.
State-run Air India’s domestic market share had consistently reduced over the years. It fell to 9.6% in 2021 from 17.3% in 2014. It was purchased in January 2022 by the Tata conglomerate, which was already running Vistara and AirAsia India at the time. Their domestic market shares in 2022 were 9.2% and 6.2%, respectively. In November last year, Air India announced a merger with both Vistara and AirAsia India. Taking Vistara and AirAsia India’s market shares into account, the Air India group airlines’ market share stands at 25% in 2023. Currently, the merger application is pending with the Competition Commission of India.
As many as 685 million people are expected to fly in India in 2042 compared to the 165 million in 2019, according to Airbus’s 20-year forecast released in June 2023. This makes India the third largest civil aviation market after China and the United States and one of the fastest growing ones. A Barclays report released in June shows that Indian carriers account for nearly 7% of the industry backlog of orders, the second largest in the world after the U.S.
In such a rapidly growing market, the presence of two large and established players could lead to price increases in the future. “India does look to move towards just two main players in the aviation space in future. While there remains a fear of a duopoly, the Air India group will take a while to consolidate,” Amey Joshi, an independent aviation analyst, told Reuters.
24/07/2023 Sumanta Sen/Reuters
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