Airlines are roaring back in places you might not expect

When India’s Tata Group bought the national airline, it was hailed as something of a miracle.

Air India is a state-run airline that has been in debt and underfunded for decades. No one wanted even a piece of the iconic but money-losing airline.

But the deal was struck in 2021 as the world was emerging from the pandemic, and airlines were betting big on revenge travel once borders reopened.

they were right. The recovery is on track and air travel will get off to a strong start in 2024. There are warnings of slowing growth in the United States, with spending expected to plateau after a post-pandemic spending surge. But on the other side of the world, in Asia, it’s a different story.

“If you look at the size of the business opportunity in India, it’s already the most populous country in the world,” Air India CEO Campbell Wilson told the BBC at a recent aviation event in Singapore. country,” he said. “It has a geographic advantage, connects regions around the world, and it’s a very underserved market.”

India’s domestic aviation market is expected to be five times the size of 2019 by 2042, with Indians taking about 685 million trips a year, according to aircraft manufacturers. airbus. That would make the South Asian country one of the world’s fastest-growing civil aviation markets, third behind China and the United States.

It’s not just India. Indonesia, currently ranked 13th in the world by passenger numbers, is expected to jump to fourth place by mid-century, according to analysts. The Philippines, Thailand and Vietnam are also expected to see booms in air travel in the coming decades.

These are all emerging economies with growing young populations who can afford to spend on travel. And it shows that global air traffic is up 16% over last year. But in Asia, the increase was nearly double, according to industry statistics.

Governments in these regions are also investing in infrastructure to improve connectivity, which is essential in large archipelagos like Indonesia and the Philippines.

Of course, China is an obvious market. Despite the current economic downturn, Chinese travelers are emerging from zero-corona rules and returning to vacation. The Chinese government currently offers visa-free travel to citizens of certain countries, and some countries, including Thailand and Singapore, have also agreed to do so.

Glenn Fogel, CEO of online travel agency Booking.com, said: “We’re pleased that people are starting to travel from China, which is probably one of the last countries to see a big return in travel.” ” he says.

But a slowing Chinese economy, uncertainty about doing business in the country and a drop in consumer spending are causing airlines to look for alternative markets.

“Asia is a very exciting place. The Philippines is one of the most exciting places. There are huge opportunities there,” said Michael Shukus, CEO of Philippine low-cost carrier Cebu Pacific. To tell.

The company struggled during the pandemic without government support. And like many of its competitors around the world, the company is facing shutdowns due to defects in its Pratt & Whitney engines.

But in the past two years, it has made a comeback, expanding and cornering more than half of the domestic market. The Philippines’ new government is also helping, with plans to privatize Manila’s international airport and add runways across the archipelago to accommodate larger and more aircraft.

Shuks has high hopes for the country of about 115 million people, where per capita spending is rising. “We have a relatively young, educated population and a growing propensity to travel.”

India, on the other hand, is a difficult market to conquer. Air India faces strong domestic rivals in the Indigo space and faces a difficult task of matching Emirates and Qatar Airways, which are consistently ranked among the world’s best airlines.

But Tata, a conglomerate that had found success in its salt-to-software business, began to turn around this flagging career. The company has already spent millions of dollars investing in new planes, new branding and rebuilding old and inefficient systems.

The company currently wants to combine five airlines: three Air India subsidiaries and two joint ventures, AirAsia India and Vistara (with Singapore Airlines). Our goal is to be a highly regarded airline for international passengers and a reliable, low-cost option for domestic passengers.

Mr Wilson hopes to restore Air India’s glory. Air India was India’s first airline, founded by the Tatas in the 1930s, rebranded as Air India, and nationalized in the 1950s. He believes that winning in the international market is key, but that there is a need to “connect more cities around the world with India non-stop” and this will require opening more routes and, of course, However, more aircraft need to be purchased.

The company has already started buying up. The company ordered more than 200 of his Boeing Max 8 and Max 10 aircraft in one of the largest airline deals in aviation history. But the Max family of planes has been under intense scrutiny since the door plug of a 737 Max 9 plane blew off during a flight in the United States, raising concerns about the already delayed Max 10 model. This came after two fatal crashes in 2018 and 2019 caused by flaws in flight control software. Boeing’s crisis over its safety record also led to the resignation of CEO Dave Calhoun.

“If we have concerns, we will raise them at the highest levels, including at Boeing,” Campbell said.

Wilson believes Air India’s future is to transform India into a global transport hub like Dubai or Singapore.

This may be a challenge after the pandemic, especially given that long-haul flights to Europe have not yet resumed. Manila, Jakarta and Bangkok will no longer offer head-to-head matches against London, Frankfurt and Rome, according to aviation data provider Cirium. Travelers from these countries are therefore choosing to fly within East and Southeast Asia, increasing air traffic in the region.

But this could also be an opportunity for Air India and Delhi, given that some Southeast Asian capitals lag behind other international aviation hubs such as Singapore, Hong Kong and Dubai.

But the industry is bright as the pandemic is over, people are flying again and the economy is recovering.

“The reality is that people like to travel,” Vogel said. “We know that as long as the economy is growing, travel will grow a little faster. And our job is to try to capture a bigger piece of that growing pie.”