Global airlines pile on India capacity as US-Europe traffic drops

Global Airlines Expand Capacity in India Amid Declining US-Europe Traffic

Global airlines are ramping up their services to India as demand across the transatlantic routes weakens, influenced by ongoing global economic uncertainties. Delta Air Lines is set to launch new flights from Atlanta to Delhi and enter into a code-sharing agreement with IndiGo.

Increased International Routes to India

The aviation scene in India is witnessing significant changes as international airlines enhance their offerings to the world’s most populous country, aiming to compensate for the stagnant demand on transatlantic flights. During the recent International Air Transport Association annual meeting in New Delhi, various foreign carriers and leading Indian airlines unveiled plans to initiate or expand their services to and from India. Specifically, Delta Air Lines has announced its intention to commence non-stop services from Atlanta to New Delhi, coupled with a new code-sharing partnership with IndiGo, along with other partners such as Air France-KLM and Virgin Atlantic.

Private ownership of Air India Ltd. has ushered in substantial international expansion plans, with the airline placing significant orders for 570 aircraft from both Airbus and Boeing since 2023. Similarly, IndiGo boasts an impressive backlog of over 900 aircraft orders, including a recent agreement for 60 A350 widebody planes.

With India already standing as the world’s third-largest domestic aviation market, the burgeoning middle class will be a pivotal factor in driving future growth, even as global travel demand faces pressure due to economic uncertainties.

“It’s hard to find a more exciting market right now than India,” stated Shai Weiss, CEO of Virgin Atlantic, during an interview in New Delhi. “The initial competition will be tough, but we are optimistic about the next 30 years.”

Potential Challenges and Considerations

As the focus on the Indian market intensifies, some industry experts are expressing apprehension regarding a potential race to the bottom, where airlines may compete aggressively to fill seats, risking overcapacity and reduced profit margins. However, British Airways CEO Sean Doyle believes that while initial imbalances might occur, demand will eventually catch up with capacity. “There are significant opportunities for direct services,” he remarked.

IndiGo is capitalizing on the influx of foreign airlines, forming several partnerships with major global players. At the IATA AGM in New Delhi, Delta and its partners announced plans to enhance code-share agreements, presenting even more options for Indian travelers.

Nonetheless, India’s heavily regulated aviation market creates substantial barriers for foreign carriers seeking to deepen their engagement. Flight rights depend on preference agreements that regulate the number of seats available. This framework potentially hampers India’s aspirations to elevate its status as a global aviation hub.

According to Emirates President Tim Clark, modifying these policies could foster growth and contribute positively to India’s economy. “The significance of transport as a wealth multiplier is critical, and not adjusting these policies could ultimately be detrimental,” he noted.