IndiGo made history in the week starting April 7 by momentarily surpassing global giants Delta Air Lines and Ryanair to become the world’s most valued airline. This capped a series of headline-grabbing moves over the years since it took to the skies. The most significant was in mid-2023 when it announced non-stop flights to four Central Asian cities, not usual travel destinations for Indians and not connected by an Indian carrier till then. Within months, these destinations recorded triple-digit growth in the number of Indian visitors.
To meet the growing demand, IndiGo had to prioritise fleet allocation to Baku, Azerbaijan; Almaty, Kazakhstan; Tbilisi, Georgia; and Tashkent, Uzbekistan. Baku registered 283% traffic growth from India in January-September 2024 compared to the same period in 2023. It was followed by Almaty (172%), Tbilisi (147%) and Tashkent (90%).
Bolstered by the response, IndiGo talked about starting direct flights to international cities not served by a domestic carrier and announced in earlier this year that it would connect four new destinations: Krabi, Thailand; Manchester, UK; Seychelles; and Fujairah, UAE. In fact, even global carriers do not fly directly between Delhi and Manchester, IndiGo’s second European destination after the Netherlands. With leased wide-body aircraft, it is set to announce 10 new international destinations this year.
Indeed, after capturing 60%-plus domestic market share, IndiGo has set its sights on dominating the global skies too, including mid- and long-haul markets such as northern Europe, the US, Canada, Australia and Japan. Air India is the only domestic airline that connects these countries. This sets the stage for an epic battle between Air India, which has a monopoly on long-haul routes, and IndiGo.
For IndiGo, the opportunity is too big to be missed. Around 26 million passengers flew on long-haul routes from and to India in FY24 and generated $16 billion in revenue. But the share of Indian carriers on long-haul routes (only Air India) was just 21%. “This contributes more than 50% to Air India’s revenue,” Nipun Aggarwal, Chief Commercial Officer, Air India, said recently. For IndiGo, international is believed to have contributed about 25-30% of revenue in FY25.
Clearly, international has big margins, and growth. The international passenger traffic for Indian carriers is expected to grow by 15-20% in FY26, more than the 7-10% growth expected in domestic, says an ICRA report. The total international traffic from/to India rose 11.4% to 5.7 million in the first nine months of FY25. The international traffic for Indian carriers also rose 11.4%.
The Airports Council International says India is likely to be the fastest-growing large aviation market over the next three decades. But there is a paradox; it is among the few big countries where domestic airlines are not leaders on international routes. The market share of foreign airlines on global routes has been 55-60% over the last three years. IndiGo has 20% share of India’s international seat capacity, with Air India (including Air India Express) at 24%. It plans to change this by deploying 40% capacity on the international sector by 2030, up from 28% at present.