Despite rapid growth, India still has fewer planes in air than Southwest Airlines: Akasa

Aditya Ghosh, co-founder, Akasa Air says India is still an under-penetrated aircraft market.

The demography of aviation customers is changing as one-third of the air traffic comes from tier 2 and 3 cities, said Aditya Ghosh, Co-founder of Akasa Air. Ghosh compared the aviation industry to 2012 when 90 percent of the air traffic in India ran between Delhi and Mumbai. “The heartland from where the consumer is coming is changing,” Ghosh said in his presentation at Motilal Oswal’s 19th Annual Global Investor Conference.

Ghosh told Moneycontrol on the sidelines of the event that demand in tier 2 and 3 cities is secular throughout the country. “It’s not like there is one particular state that is doing better than the others. We see demand throughout the country. What is also happening is that the state governments themselves are very active in attracting tourism and air travel. So 15-20 years ago there would be one city that would see air travel in any particular state; now there are states that have multiple airports, which are doing well and seeing traffic,” Ghosh remarked.

Ghosh added that India is still an under-penetrated aircraft market. “ I used to say in 2006 that the entire Indian aviation industry has less number of aeroplanes than Southwest Airlines. I’m saying this in 2023, the entire Indian aviation industry put together still does not have the same number of airplanes as Southwest Airlines. One airline in the US, which is not even the largest airline in the US, has more narrow-body jets than the entire Indian aviation industry put together” said Ghosh.

According to data from CAPA, India has 701 aeroplanes in service while Southwest Airlines has 803 aircraft in service as of June 2023. Indian aviation companies have placed orders for more than 1,000 aircraft while Southwest Airlines have 462 orders in their book.

When asked whether high interest rates will affect the discretionary spending power of customers and therefore air travel capacity, Ghosh replied that he doesn’t see air traffic demand dampening. “Air traffic in emerging economies like India has a symbiotic relationship with the overall growth of the economy. So if India continues to strive towards a $5 trillion economy, we in the airline business will benefit from that growth as well,” Ghosh noted.