India is the third-largest and one of the fastest-growing aviation markets in the world. Despite this, the number of long-haul international airlines is acutely lagging in India. As demand for international traffic only grows, which airline will fill India's demand for international traffic? Will foreign airlines continue to lead or will a homegrown carrier capture the market? Let's find out.

The current market situation

Over 66 million international passengers flew to and from India in fiscal year 2020, out of a total of 341 million total passengers, according to data from Statista. This makes India the third-largest aviation market by size and also the fastest-growing. However, the number of international airlines is few.

Compared to other large markets, India only has one major international airline. The US has three (United, Delta, American), while China has multiple (Air China, China Eastern, China Southern, and more). While other major international carriers do operate, most only focus on short or medium-haul routes.

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Following the collapse of Jet Airways last year (which held 12% of the market), Air India became India's only major long-haul international airline. While Air India does operate a substantial fleet of 49 widebody aircraft, it does not serve many key routes out of India, leaving the market open to foreign competition.

Who will fill the demand?

We know that Air India is highly unlikely to meet the growing demand, but many are eager to capture the market. The current market leaders are the Middle East Three (Emirates, Etihad, and Qatar), who hold nearly a quarter of the market, according to the Economic Times. Each airline has over 10 destinations in India and has only been growing its footprint, offering the most destinations compared to any other airline.

While United, Lufthansa, and others are making inroads, the ME3 continue to dominate the market. Without the intervention of any other carrier, the ME3 are likely to capture the growing international market. However, there is increasing competition.

New entrants

India recently has a new long-haul carrier in Vistara, a Tata Group and Singapore Airlines-owned airline. The airline recently inducted a fleet of 787s and started flights to London, becoming India's second long-haul airline. While still small, Vistara does have the potential to start more direct routes from India and claw back market share from the current leaders.

Low-cost carriers such as IndiGo and SpiceJet could also expand their market share in the coming years. IndiGo already holds an impressive 8% of the market despite only flying medium-haul international routes, while SpiceJet is also planning long-haul flights later this year. The introduction of planes like the A321XLR could make low-cost, long-haul a viable proposition for many more airlines.

While there is no definitive answer as to who will fill the growing demand, there are many airlines in the mix. As the industry slowly recovers from the current downturn, we can expect significant competition in India in the coming years.

Who do you think will lead the Indian market? Let us know your thoughts in the comments!