Just how fragmented is the Australia-India market?
And what are the implications for direct Australia-India flights
Travel between Australia and India has grown phenomenally in recent years. ABS data shows that 1.1 million people travelled between the two countries in 2025. This was a 6% increase over 2024, and 27% higher than the last full year before the COVID-19 pandemic (in 2019).
Longer term trends are even more impressive. Over the last decade, travel between Australia and India has increased 81%, and has increased in relative importance having grown from 3.2% of all travel to/from Australia a decade ago to 4.9% in 2025.
The market is also relatively balanced with the Australian point-of-sale accounting for 57% of the market. Furthermore, the Australian point-of-sale has grown more rapidly in recent years, increasing 9% over the last year and 41% since 2019.
We’ve previously analysed the reasons for this growth, ascribing it to growing migration, cultural and economic links between the countries, spurred on by India’s strong economic growth.
The growth has contributed to a large build-up in direct flights. In 2019, Air India were the only airline providing direct flights, operating 3x/week Delhi-Melbourne and 5x/week Delhi-Sydney flights (both B787-8). Since then, both routes have increased to daily, while Air India also introduced 3x/week Mumbai-Melbourne (since suspended due to aircraft availability challenges). From July 2026, Air India will upgrade Delhi-Melbourne to the B777-300ER, resulting in a significant increase in capacity.
In 2021, Qantas reentered the Indian market after nearly a decade long absence with seasonal Melbourne-Delhi (3x/week) and year-round Sydney-Bengaluru currently operating up to 6x/week.
Despite the large and growing market, passengers on direct flights make up a small proportion of the market. In 2024, BITRE indicates 301,934 arrivals on direct flights from India, while ABS indicates 992,730 total arrivals from India, meaning that net transit traffic accounts for 70% of total travel between the two countries (BITRE data is not yet available for 2025).
We’ve previously argued that this is due to the fragmentation of the market, particularly on the Indian side, as well as the seasonality of the market. But what does this mean? We’ve come across some detailed data on O&D city pairs between Australia and India that helps us explore this in more detail …
Seasonality
Australia-India is big market, with an average of 2,879 inbound passengers (to Australia) per day in 2025. To put that in perspective, that’s nearly 6 of Qantas’s A380s or more than 8 of Air India’s B777-300ERs each day. But daily averages estimated from annual aggregates can be deceiving, and even misleading!
The market is incredibly seasonal with significant seasonal peak in the southern hemisphere summer, coinciding with the Christmas holiday period, likely an artefact of the dominance of outbound VFR traffic. Furthermore, the seasonality varies between inbound and outbound traffic.
Data from 2025, shows that the busiest month for arrivals in Australia was January with 154,310 passengers, compared to just 58,560 in the quietest month (July). That amounts to 4,978 inbound passengers per day in January (nearly double the annual average), but just 1,889 passengers per day in July.
Seasonality generates significant challenges for airlines offering direct flights, and likely contributes to the large proportion of traffic utilising 3rd country transit hubs like Malaysia and Singapore. These hubs are able to balance seasonality with other routes, for example, connecting Australians to Europe during the northern hemisphere summer, or more stable business traffic between Australia and Southeast Asia throughout the year.
We’ve previously analysed how Qantas and Air India manage this seasonality, with Qantas varying frequency and operating seasonal routes to reduce capacity during the low season.
Air India’s capacity is more consistent, with an emerging strategy focusing on connecting traffic between Australia and Europe during the low season. This is an elegant strategy given the counter cyclicality between Australia-India and Australia-Europe, with the latter peaking during the Australia-India low season.
Meanwhile, Qantas pivot that capacity directly towards Europe rather than through India, for example, their seasonal Perth-Rome flight. Take a look out our detailed analysis of this from last year to see this seasonality in more detail. Seasonality is a contributing factor to the dominance of 3rd country connecting traffic between Australia and India, but it’s not the primary cause. We’ve hypothesised that its the fragmentation of the market. But what does this mean?
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Fragmentation
The BITRE data that we utilise as the core of many of our analyses is great at measuring capacity and passenger flows on direct flights, but it doesn’t say anything about network traffic. For example, we know that Malaysian Airlines carried 1,015,891 passengers to/from Australia in 2024, and while we know anecdotally that they’re a major player in the Australia-India market, we can’t estimate how many of those 1,015,891 passengers were carried between Australia and India.
While we can triangulate the BITRE data with ABS data, it still only generates aggregate estimates, for example, the previously noted estimate that 70% of Australia-India traffic transits via 3rd countries is a “net” measure. We don’t know where they’re transiting through, or connecting behind or beyond. What we really need are estimates of O&D city pairs, however these data aren’t available from public sources and only available from fairly expensive proprietary databases.
Fortuitously, a short analysis by Behramjee Ghadially on LinkedIn a few months back shared O&D city pair data for the largest 16 city pairs between Australia and India (8 largest Indian and 2 largest Australian cities) in 2024. These data count both direct and transit traffic, measuring both directions of travel.
The O&D city pairs indicated a total demand of 1.42 million passengers in 2024. Triangulating this with the ABS data analysed earlier, the 16 busiest city pairs accounted for approximately 71% of the total Australia and India market. Note that the ABS data only measures arrivals, but scaling either series allows triangulation.
Of the 16 city pairs, only 3 currently have direct flights, although a 4th did operate during 2024 (the now suspended Mumbai-Melbourne). Nevertheless, direct flight city pairs accounted for only 34% of the total market (38% including Mumbai-Melbourne).
Turning this around, it means that routes without direct flights account for 66% of all traffic between Australia and India (62% if Mumbai-Melbourne were included). If a new direct flight were added to the largest unserved city pair (i.e. Hyderabad-Melbourne) this would only decline to 57%.
We can break this down on both sides. On the India side, Delhi accounts for 29% of the total market, while Bengaluru, Mumbai and Hyderabad account for just 8% each. Combined, the 2nd, 3rd and 4th largest markets are smaller than the Delhi market.
As a methodological point, this is actually an undercount since Delhi’s 29% only refers to the 71% accounted for by the 16 busiest city pairs. For example, Delhi-Brisbane would be included in the “other” category. This is evident when considering the same figure on the Australian side and observing the “other” category is also 29%. Nevertheless, on the Australia side, the market is dominated by Melbourne and Sydney with 40% and 31%, respectively.
This is what we mean by fragmentation: that the traffic between Australia and India is spread across so many cities, particularly on the Indian side. What these figures are showing us is that the fragmentation is far more extensive on the Indian side, with at least 71% of the Australian side dominated 2 cities. This goes a long way to explain how both Air India and Qantas have concentrated their direct flights on Melbourne and Sydney.
While the Indian side is fragmented, requiring 8 cities to cover the same dominance as 2 on the Australian side, Delhi is an outlier as it accounts for a disproportionately large share of the traffic on the Indian side. This also goes a long way to explain why both Air India Qantas have concentrated a lot of direct capacity on Delhi. The outlier is Qantas’s Sydney-Bengaluru flight!
While Sydney-Bengaluru is the 3rd largest city pair, it accounted for just 3% of the total market of 95,726 annual passengers or just 131 passenger per day in each direction. No doubt, the Hyderabad fanboys and fangirls are reading this and getting ready to rumble! How is it that a city with at least 156,664 annual passengers between Australia and India doesn’t have direct air services? That’s 215 passengers per day each way, more than enough for a 3x/week flight, right?
The challenge lies with seasonality, yields and connecting traffic. If you were wondering why we focused so much of the earlier part of the analysis on seasonality it’ll show now.
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Seasonality revisited
We can’t breakdown the O&D city pairs by month, but we can apply aggregate parameters based on the seasonality in the ABS data at the route level. While this assumes there is no variation in seasonality by city pair, it’s instructive nonetheless.
Let’s take the largest unserved city pair, Hyderabad-Melbourne with 85,581 annual passengers and an average of 117 passengers per day each way in 2024. Obviously, not every route requires a daily flight, so consolidating demand weekly means means demand averages 821 passengers per week in each direction. A 3x/week flight on Air India’s B787-8s would supply 768 seats, while the same on Qantas’s A330-200s would supply 753 seats. This seems viable, right?
Not so fast! When applying the aggregate seasonal proportions at the route level, we see the effect of the seasonality. While January generated demand for 196 passengers per day in each direction, July only generated demand for 83 passengers per day. On a weekly basis that’s 1,374 passenger per week in each direction in January, but just 578 passengers per week in July. So even a 3x/week flight would run into problems in the low season.
One might question why we don’t add Hyderabad-Sydney to this, but that belies the point since there’s no network advantage for a passenger flying Hyderabad-Melbourne-Sydney compared to Hyderabad-Bengaluru-Sydney, Hyderabad-Delhi-Sydney, or any number of 3rd country transit options (e.g. via Kuala Lumpur, Singapore, Bangkok, Hong Kong, etc). And this is the fundamental challenge for airlines in fragmented markets.
This means that home market carriers like Air India and Qantas can only generate a network advantage for the non-stop O&D city pairs. Seasonality compounds this by reducing the market size of many O&D city pairs, and significantly undermines the viability of many Australia-India city pairs.
Even looking at the largest O&D city pair (Delhi-Melbourne) we can see the challenge it presents. With annual demand for 363,192 passengers, this translates into an average of 498 passengers per day in each direction. January averages 833 passengers per day in each direction, while the weakest month (July) generates demand for 351 passengers per day. On a weekly basis, that’s 5,833 passengers per week in January, and 2,455 passengers per week in July.
We’ve noted how Air India are increasingly managing seasonality by pivoting capacity to onward connections to Europe (more on that later). However, Qantas only operate Melbourne-Delhi seasonally, from the end of October through the end of March. If Qantas can’t maintain Delhi-Melbourne annually, it’s unlikely that Air India could maintain Hyderabad-Melbourne year round without the balancing connecting traffic onto Europe. And since Air India don’t serve any European destinations from Hyderabad this isn’t viable. So why not seasonal like Qantas’s Delhi-Melbourne flight?
Generally speaking, seasonal flights generate higher operational costs and will have shorter periods over which to share the fixed costs. To overcome this, airlines must earn very good money during the high season. But not all routes have the same earning potential and just because a route has solid demand, it doesn’t follow that the demand is at the price points required to make the route a success.
Follow the money
Passenger demand is one thing, but what are customers willing and able to pay? It’s all good and well arguing that Hyderabad is a bigger market than Bengaluru, but if airlines can generate higher prices from Bengaluru then they’re probably going to focus capacity on Bengaluru over Hyderabad. So what does the data say?
Data shared by some of our friends on social media highlight just why Qantas probably chose to fly Sydney-Bengaluru rather than to Delhi, Mumbai or Hyderabad. It shows that Sydney-Bengaluru had the highest average fare of Sydney-India city pairs during FY2024, earning an 8% unit revenue premium over Mumbai and Chennai, and a larger 25% premium over Hyderabad. One might counter that Sydney-Delhi earns the lowest prices, however that doesn’t account for the relative size of the market. Delhi-Sydney is more than double the size of the 2nd largest (Sydney-Bengaluru), and larger than Mumbai, Hyderabad and Chennai combined.
Qantas must chose between higher price or larger market, while also considering competition. For example, while Sydney-Delhi is larger, it has competition from Air India’s non-stop flight. Presented with the choice between Bengaluru or Hyderabad, Qantas were likely swayed by a larger revenue potential for a similar market size. Another consideration are the network effects and connecting traffic.
Other data shared on X shows that only 41% of the traffic on Qantas’s Sydney-Bengaluru flight in 2024 was point-to-point traffic (i.e. between Sydney and Bengaluru), while 59% connected at one or both ends. Of the 10 biggest connecting markets, 6 were on the Indian side (Hyderabad, Mumbai, Pune, Ahmedabad, Cochin and Delhi) and 3 on the Australasian side (Melbourne, Brisbane, Auckland), and 1 further beyond Sydney (Honolulu).
Of the 59% of traffic that connected, data from a comparable source shows that approximately 34% connected at Bengaluru and 25% at Sydney. This once again highlights the fragmentation on the Indian side. Sydney is Qantas’s largest hub - this is not in question - however, is Bengaluru an optimal connecting hub for Qantas?
Geographically, points further south and east in India reduced backtracking when flying to/from Australia, but that doesn’t mean they’re the most efficient options. Qantas must consider the number of destinations served from each city, available capacity and alignment of schedule. Furthermore, they must consider these in the context of their codeshare partner, IndiGo.
Looking at Air India and IndiGo’s domestic networks provides some insight into Air India and Qantas’s choices. Once again, the data are imperfect. We don’t have access to proprietary data that would allow us to measure seat counts for each carrier at each airport. A recent article by Network Thoughts gives us a snapshot for a single month (August 2025), showing that approximately 33% of Air India’s seat capacity (including Air India Express) was concentrated on Delhi, reinforcing Air India’s choice to concentrate Australia-India capacity on routes to/from Delhi, despite its geographic location.
Meanwhile, IndiGo doesn’t concentrate their capacity anywhere nearly as much as Air India, with only 20% at Delhi. But proportions can be deceiving since IndiGo’s have 27% more seats to/from Delhi in absolute terms than Air India, despite its lower relative share. Given IndiGo’s more varied capacity distribution and their relatively larger scale, Qantas’s have more choice than Air India. While Bengaluru and Hyderabad would probably both work well as a hub for Qantas, they have the luxury to chose the point which will give them higher fares on O&D traffic, while generating similar connectivity from an efficient geographical position.
We’re able to validate this with an alternative metric. Public data from Indian authorities allows estimation of the number of flights by each airline to/from each airport. It’s imperfect as it doesn’t account for variation in aircraft size, but it’s a good proxy for capacity nonetheless. Another of our friends on X does a great job of presenting and visualising these data, telling a similar story.
The varying domestic networks highlight how and why Air India and Qantas have developed different strategies, with Air India focusing their capacity on Delhi, despite its relatively inefficient location. While Delhi provided Air India with greater critical mass for domestic connections, it also provides them with the largest O&D markets and critical onward connections to Europe.
Meanwhile, Qantas have picked a destination with sufficient domestic connections and an optimal geographic location alongside the most lucrative ticket prices. And unlike Air India, Qantas have no interest in onward connections beyond India (i.e. to Europe)! This is a great example of how two airlines can adopt different strategies on overlapping routes. In both cases, they’re sound strategies.
Implications
But what are the implications of this all? How will the fragmentation and seasonality of the market affect future expansions of Australia-India flying?
Both Air India and Qantas have signalled their intent to expand capacity between Australia and India. Air India added Mumbai-Melbourne in 2024, although this didn’t last. They’ve since increased planned capacity on Delhi-Melbourne by switching the B787-8 for the larger B777-300ER. Meanwhile, Qantas International CEO Cam Wallace has spoken publicly about expanding capacity to India, highlighting that they’d prefer to do this with B787s rather than the current A330s.
If we’d considered this question a year ago, we’d have answered this very differently to how we would today. We wouldn’t have been wrong, however Air India have evolved their India-Australia strategy. In 2024, they were adding Mumbai-Melbourne, but in 2026 they’re increasing capacity on Delhi-Melbourne. More importantly, they’ve retimed both their Delhi-Melbourne and Delhi-Sydney flights, with an emphasis on onward connecting traffic to Europe. We’ve hypothesised that they’re looking to balance seasonal variations in the Australia-India market with the countercyclical Australia-Europe market.
Network Thoughts explained this very clearly at the time, highlighting how the retiming enabled passengers from Melbourne or Sydney to have a 65 to 80 minute connection to Frankfurt and Paris, although there are question marks regarding the return flights that don’t make viable connections (same for Amsterdam, Birmingham, Manchester, Milan, Rome, etc). London is the only European route that has efficient connections to/from Melbourne and Sydney on Air India’s network in both directions.
So we need to narrow the hypothesis: it’s not Europe, it’s London! Would they really do this for just one destination? Well, yes! The Australia-UK market is huge! To put it in perspective, it was nearly 30% larger than the Australia-India market was in 2025, accounting for 1.4 million inbound passengers per ABS data. Australia-UK accounted for 39% of all Australia-Europe travel, and 46% of the outbound Australian market.
Given this strategy, what does Air India do? Do Air India add new points in India (e.g. Mumbai, Bengaluru or Hyderabad) to connect to/from the larger O&D markets of Melbourne and Sydney, or do they seek to add more points in Australia to connect to Delhi (e.g. Adelaide, Brisbane or Perth)?
If they’re looking at building the connecting model then surely they’ll look to add another point in Australia and connect it to Delhi! And just this week, The Hindu reported that Air India are considering just this, with Adelaide and Brisbane being considered.
However, they also note that “the proposed Australian services may be operated from Mumbai and Bengaluru, in line with the airline’s strategy to strengthen multiple metro hubs and distribute long-haul operations beyond Delhi.” While this may under consideration, we’d be very surprised. Ultimately, if Mumbai or Bengaluru were being considered on the Indian side, we’d fully expect this to connect to Melbourne or Sydney given the larger O&D markets. If Adelaide or Brisbane are being considered, then we’d fully expect those to connect with Delhi to enable those onward connections and balance the seasonality.
On the other hand, it’s a little more intriguing on the Qantas side. If they were to open up new Indian stations, we’d fully expect that to focus on Sydney and possibly Melbourne, i.e. Melbourne/Sydney-Hyderabad/Mumbai. However, these options would be hampered by seasonality and it’s questionable whether they Hyderabad or Mumbai would generate sufficient yields to justify a seasonal service. Alternatively, they could look to add additional capacity from other points in Australia to Bengaluru, increasing the scale and critical mass of their existing operations.
This sounds very ambitious, but before Air India or Qantas open new points on the Australian size, they must consider the relative demand. A significant driver of the market is the growing Indian diaspora in Australia. The 2021 Australian census shows that this community is heavily concentrated on Victoria and New South Wales, hence Melbourne and Sydney. Of the Indian born population in Australia, 272k and 219k resided in Victoria and NSW, respectively, whereas Queensland (Brisbane) and South Australia (Adelaide) were home to just 77k and 47k, respectively.
The relative scale reinforces how much smaller the Brisbane and Adelaide markets are, and how much more dependent they’d be on onward connections to Europe or London. As such, we’re skeptical of Air India wanting to start new routes from Adelaide or Brisbane to Mumbai or Hyderabad, rather than to Delhi.
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