State of Indian aviation industry: After years of turbulence, India’s air travel sector is finally taking off in a big way. Projections for 2024 show a 12.7% increase in overall airline seat capacity, propelling India into the top five countries globally for seat availability. On November 17, 2024, domestic airlines carried over 505,000 passengers in a single day, across 3,173 departures — a historic milestone. Such figures indicate a period of strong and sustained growth for the sector.
India has emerged as the third-largest domestic aviation market in the world, trailing only the US and China. The rebound in demand post-pandemic, coupled with supportive government policies, has created an ecosystem ripe for expansion. But the central question remains: can this momentum be sustained?
READ | How COP29 climate finance deal betrayed the world’s most vulnerable
Expansion fuelled by government support
Prime Minister Narendra Modi recently highlighted India’s transformation into a key player in global civil aviation. Over the past decade, the number of airports has more than doubled, rising from 74 in 2014 to 157 in 2024, with plans to reach 350-400 by 2047. Airlines have placed orders for over 1,500 aircraft, and the Economic Survey 2023-24 predicts a demand for more than 2,200 aircraft by 2042.
In September 2024, the second Asia Pacific Ministerial Conference on Civil Aviation resulted in the adoption of the Delhi Declaration, which promotes regional cooperation and sustainable aviation growth. The government’s long-term vision aims to make air travel accessible to the common people.
Aviation industry: Historically on thin ice
Despite this optimism, India’s aviation sector has a history of setbacks. Airlines like Go First, Kingfisher, and Jet Airways have collapsed under the weight of high operational costs, particularly the soaring prices of aviation turbine fuel (ATF). Issues like pilot shortages, safety concerns, and weak regulatory oversight have also plagued the industry.
Moreover, some experts caution that the current boom may partially stem from pent-up demand after the pandemic. The revenge travel phenomenon of 2023 led to record-breaking revenues, but this surge may cool as economic pressures, including the rising cost of living, taxation, and geopolitical challenges, begin to weigh on consumers.
India’s air travel industry is also grappling with significant pilot fatigue issues. Recent incidents, including the tragic deaths of pilots on duty, have highlighted the severe consequences of overworked flight crews. Despite the Directorate General of Civil Aviation proposing new regulations to address pilot fatigue—such as extended rest periods and mandatory fatigue reports — implementation has been delayed due to resistance from airlines concerned about increased operational costs and staffing needs.
Furthermore, the sector faces infrastructure challenges, as evidenced by the recent roof collapse at the New Delhi airport. This incident raised concerns about the quality and safety of rapid infrastructure developments aimed at accommodating the growing aviation market. The swift pace of construction may compromise structural integrity, highlighting the necessity for stringent safety inspections and adherence to high construction standards to prevent such tragedies in the future.
Risks of a looming duopoly
The potential emergence of a duopoly in the domestic aviation market is another critical concern. IndiGo, which commands a 60% market share, and Tata Group airlines, with 28%, dominate the sector. Meanwhile, SpiceJet teeters on the edge of collapse. This consolidation could lead to higher fares and reduced competition, undermining the government’s vision of democratising air travel. While Akasa Air shows promise as a new entrant, it will take time to challenge the dominance of the incumbents.
To foster a more competitive landscape, the government must encourage entrepreneurship and innovation in aviation, ensuring new players can enter and thrive in the market.
Towards a greener future for aviation
Amid these challenges, the government is pushing the sector to adopt sustainable practices, including carbon-neutral airports and the integration of solar energy. These initiatives are vital for aligning the aviation sector with India’s broader climate goals.
India’s aviation sector holds immense potential, driven by rising demand, economic growth, higher disposable incomes, and greater penetration of aviation infrastructure. Initiatives like the Regional Connectivity Scheme (RCS-UDAN) aim to revive unserved and underserved airports, boosting connectivity and accessibility.
As India’s economy expands, the aviation sector stands poised to play a crucial role in the nation’s development. However, realising this potential will require a delicate balancing act: addressing systemic challenges, fostering competition, and embracing sustainability. The government and industry stakeholders must seize this opportunity to ensure that India’s aviation story continues to soar.