As much as half of the country's international air passenger traffic is expected to be catered to Indian airlines by the financial year 2027-28, credit ratings agency CRISIL said on Monday.

The share of Indian airlines in international passenger traffic, including originating or terminating as well as the traffic transitioning through the country, is seen surging 700 basis points to around 50 per cent by 2027-28, from 43 per cent in the previous fiscal, it said.

The improvement would be driven by Indian airlines deploying additional aircraft and adding new routes in the international segment, as well as their inherent advantage of superior domestic connectivity compared with foreign carriers, CRISIL Ratings said in its report.

The report noted that the business profiles of Indian carriers will strengthen as a result of their rising share in international traffic, which is more profitable than the domestic segment.

India's international passenger traffic grew to around 70 million in fiscal 2024, from a low of 10 million in pandemic hit fiscal 2021, and has surpassed the pre-pandemic level, according to CRISIL.

The share of Indian airlines, which was rising steadily earlier, has picked up pace since the pandemic, it said.

"A noticeable shift in spending patterns has emerged after the pandemic, as evident in the increasing inclination of Indians towards international leisure travel. "Increasing disposable incomes, easing visa requirements, a growing number of airports and enhanced air travel connectivity are boosting international travel," said Manish Gupta, Senior Director and Deputy Chief Ratings Officer at CRISIL Ratings.

The government's focus on making India a hub for tourism is also expected to provide a fillip to inbound traffic.

Thus, international passenger traffic is likely to clock a compound annual growth rate (CAGR) of 10-11 per cent over the next four fiscal years, against a mere 5 per cent CAGR in the four years prior to the pandemic, he added.

Indian airlines have added 55 new international routes over the past 15 months, taking their tally beyond 300, it said.

These include direct flights originating from additional cities to popular long-haul destinations in the United States, Europe, and Australia, effectively reducing flying time and eliminating layovers, CRISIL said.

It was also said that Indian airlines are also aiming to deploy additional aircraft on short- and medium-haul international routes and leverage codeshare agreements with major global airlines to offer onward connectivity to passengers.

As such, CRISIL said, Indian airlines have certain natural advantages in cornering a larger share of the country's international traffic compared with foreign airlines.

They have superior domestic connectivity than their overseas counterparts, which serve only select Indian cities, and can offer end-to-end international connectivity on a single ticket to travellers from tier 2 and tier 3 cities, the report stated.

India's geographic location also lends itself well to air connections between the Europe, Middle East, and Africa (EMEA) and Asia Pacific regions, potentially positioning the country as a hub for international travel, the report noted.

"To capitalise on the growth in international travel, Indian airlines are investing in wide-body and long-range narrow-body aircraft for network expansion, adding new international routes and introducing long-haul non-stop flights to key destinations," said Ankit Kedia, Director, CRISIL Ratings.

Aided by the planned fleet addition and network expansion strategy, Indian airlines could log a CAGR of 14-15 per cent in the international segment over the next four fiscals, taking their market share to 50 per cent, Kedia said