New Delhi: Earlier this month, Vistara, the airline joint venture between Tata Sons Ltd and Singapore Airlines Ltd, released a study that concluded that the dilution of international flying norms is critical to India’s economic growth.

Data shows that while foreign carriers still dominate international traffic to and from India, homegrown airlines have been slowly increasing their market share, helped by new flights, efficient airports and improved service standards.

Data from the directorate general of civil aviation (DGCA) shows that in the first six months of this year, Indian airlines carried 37.2% of the international travellers to and from India, a seven percentage point increase from a decade ago.

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India allows its airlines to fly abroad after five years of domestic operations and a 20 aircraft fleet in what is called the 5/20 rule. Thus, it was only in 2004 that local private airlines like Jet Airways (India) Ltd and Air Sahara were permitted to fly international, breaking the monopoly of state-run Air India.

During this time, international passenger traffic has almost tripled to 50.8 million. At the same time, the onset of low-cost airlines after they completed the mandatory five-year period also helped change the mix. SpiceJet and IndiGo launched low-fare economy flights to South-East Asia and the Middle East. Moreover, in 2005, Air India launched a dedicated subsidiary called Air India Express to tap traffic between southern India and the Middle East, which has a significant Indian population.

As a result, Indian carriers started operating larger number of flights both on domestic and international routes.

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“It’s a simple matter of Indian airlines catching up. There are more airlines flying from India than 10 years back," said Arun Devanathan, senior engagement manager, Strategic Decisions Group International LLC, a management consultancy.

What has also helped boost Indian carriers’ business is the slew of international tie-ups. For instance, Air India joined Star Alliance, the biggest global airline alliance, while Jet partnered with Etihad Airways.

A second factor that has helped Indian carriers is the increase in airport capacity.

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While India never had a single dedicated airport hub like Singapore and Dubai, this too has changed over time. In the past decade, India built swank new airports at six major metros to compete with these bigger hubs.

Better airports allow a Bangkok passenger, for example, to fly Air India to the airline’s hub in Delhi and then travel onwards to New York on the same ticket without rechecking his baggage. Jet too made Mumbai its hub allowing passengers from Nepal, Bangladesh and South-East Asian countries to travel to Europe and the US. Now, over 60% of the company’s revenues come from international operations.

That said, it’s unlikely that Indian Airlines will significantly increase their market share.

“I don’t expect it to be a long-term trend," Devanathan said, reasoning that there would always be dozens of foreign airlines beating frequencies into India when compared with a handful of Indian counterparts.

“I am saying they will always remain at 50%. Unless there is some drastic change— government lifts the 5/20 rule or Vistara expands very fast. It’s a long shot but I won’t put my money on it," he added.

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