Report Overview

The Indian government’s increasing support, rapid economic growth, and growing middle class are expected to drive India Aviation Market during the forecast period between 2024 and 2030.

India Aviation Market – Industry Trends & Forecast Report, 2030

India Aviation Market size was estimated at USD 12.58 billion in 2023. During the forecast period between 2024 and 2030, the India Aviation Market size is projected to grow at a CAGR of 11.25% reaching a value of USD 26.54 billion by 2030. Prominent drivers of the market include the government's supportive policies, such as the Regional Connectivity Scheme (UDAN), have significantly increased access to underserved regions and fostered regional economic development. Additionally, India’s aviation sector is expanding, with the number of operational airports rising from 74 in 2014 to 157 in 2024, with plans to increase this number to 350-400 by 2047. The government’s focus on sustainability is evident in the rising number of carbon-neutral airports and investments in green energy, with airports like Delhi, Mumbai, Hyderabad, and Bengaluru already achieving carbon neutrality and the installation of solar power systems contributing to the country’s sustainability efforts. The increasing demand for domestic and international air travel, driven by improving infrastructure and more affordable airfares, has positioned India as the third-largest domestic aviation market globally. India's aviation market is also benefitting from the rising inclusivity of air travel, with more people from Tier 2 and Tier 3 cities now accessing flying options. As the sector continues to soar, it is poised for further growth with an emphasis on sustainability, expanding infrastructure, and improving regional connectivity, solidifying India’s position as a key player in the global aviation ecosystem.

Aviation – Overview

Aviation refers to the operation, development, and use of aircraft, such as airplanes, helicopters, and drones, for various purposes including transportation, military operations, recreation, and commercial activities. It encompasses all activities related to flying, from the design and manufacture of aircraft to their maintenance, operation, and air traffic control. Aviation also includes the infrastructure required for flying, such as airports, airstrips, and air navigation systems, as well as the regulatory frameworks that govern flight safety and air travel.

India Aviation Market

Growth Drivers

Rising Government Support

India's Aviation Market has seen exponential growth over the past decade, fueled significantly by the Indian government's strong initiatives. A cornerstone of this growth has been the UDAN (Ude Desh ka Aam Nagrik) scheme, launched in 2017, which aims to enhance regional air connectivity and make air travel affordable. The scheme has revitalized underserved airports and enabled airlines to offer lower fares through Viability Gap Funding (VGF). By March 2023, over 400 routes had been operationalized, connecting 70 underserved airports, with passenger traffic exceeding 7 million. Further government support has been seen through infrastructure development, such as the construction of new airports like Navi Mumbai International Airport and Mopa Airport in Goa, and the modernization of major airports like Delhi, Mumbai, and Bangalore through Public-Private Partnerships (PPP). These initiatives have increased the number of operational airports from 75 in 2014 to 148 in 2023, with investments surpassing INR 1 lakh crore in the last five years. Also, the National Civil Aviation Policy (NCAP) 2016 played a pivotal role by reforming the sector, including replacing the 5/20 rule with the 0/20 rule, and introducing open skies agreements with SAARC nations. These reforms have increased international connectivity and promoted sector-wide growth.

Restraints

High Fuel Costs

India Aviation Market is grappling with a significant challenge due to rising fuel costs. As crude oil prices surge, Aviation Turbine Fuel (ATF) prices have risen by 6%, impacting airline profitability. While airfares have decreased by nearly 10% in recent months, airlines like InterGlobe Aviation and SpiceJet are struggling to recover from COVID disruptions amidst this pressure. Additionally, high VAT on ATF at major airports exacerbates costs, limiting government intervention. The Ministry of Civil Aviation is working with state governments to reduce VAT, but this is not enough to counteract the fuel price hikes. Furthermore, reduced demand, technical problems, and grounded aircraft due to engine issues add to the strain. These combined factors are slowing the growth of the India Aviation Market, despite increasing passenger traffic.

Impact of Escalating Geopolitical Tensions on India Aviation Market

Escalating geopolitical tensions among countries and further spreading across the major regions could have a significant impact on the growth of India Aviation Market. Rising instability can lead to fluctuating fuel prices, increased operational costs, and disruptions in international flight routes. These challenges may cause reduced air traffic, especially for international flights, as consumers and businesses become more cautious. Heightened security concerns and potential changes in travel regulations could also deter passengers, leading to a slowdown in the sector's recovery. Consequently, India’s aviation industry may experience reduced profitability and slower growth amid rising geopolitical uncertainty.

India Aviation Market

Segmental Coverage

India Aviation Market – By Aircraft Type

Based on aircraft type, India Aviation Market is divided into Commercial Aviation, Military Aviation, and General Aviation segments. The commercial aviation segment holds the highest share in India Aviation Market by aircraft type. India has emerged as the third-largest domestic aviation market globally and is projected to surpass the UK, becoming the third-largest air passenger market by 2024. India’s aviation sector contributes 5% to the nation's GDP, generating approximately 4 million jobs. Also, it adds USD 72 billion in gross value to the economy. Air traffic growth in India is significantly outpacing the global average. The fleet size is expected to double, increasing from 600 to 1,200 aircraft by 2024. Meanwhile, the general aviation segment is expected to record the fastest growth rate during the forecast period. The general aviation industry in India is viewed as a luxury service catering to both business and private needs, playing a significant role in the country’s economic development. The growth of India's general aviation sector has been fueled by a rise in tourist traffic and an increasing number of high-net-worth individuals (HNWIs).

India Aviation Market – By Type of Service

By type of service, India Aviation Market is bifurcated into Passenger Service and Cargo Service segments. The passenger service segment holds a higher share in India Aviation Market by type of service, driven by robust domestic and international travel demand. Factors such as a growing middle class, increased disposable incomes, and the availability of low-cost carriers have made air travel more accessible, significantly boosting passenger volumes. Government initiatives like UDAN (Ude Desh Ka Aam Nagrik) further expand regional connectivity, integrating even remote areas into the aviation network. This has enabled the passenger service segment to maintain a larger market share than cargo services, supported by India’s status as one of the fastest-growing aviation markets globally, especially in the domestic sector.

India Aviation Market – By Class

Based on class, India Aviation Market is divided into Economy Class, Premium Economy, and Business & First-Class segments. The economy class segment holds the highest share in India Aviation Market by class. The economy class segment continues to hold the highest share in the India Aviation Market by class, as Indian travelers predominantly prefer budget-friendly options for air travel. While there has been a noticeable increase in the selection of premium economy and business class seats in recent years, the economy class remains the preferred choice for the majority of passengers. Data from online travel agents like ixigo and Cleartrip show that over 99% of international bookings are for economy class, with a similar trend seen in domestic travel. The rise in premium options is primarily observed on long-haul international flights, particularly to destinations like the US, Canada, and the UK. However, economy seats still dominate, with airlines like Air India and Emirates offering a significantly larger number of economy seats compared to business or premium economy seats. Additionally, with the growing trend of pre-booking preferred seats, a substantial portion of domestic travelers, particularly on low-cost carriers, opt to pay extra for their preferred seat selection. Despite the growing traction for premium classes, economy class continues to hold the largest share of the market, driven by cost-conscious travelers seeking affordable options.

India Aviation Market – By End User

Based on end user, India Aviation Market is bifurcated into Commercial Airlines and Government & Defense segments.

India Aviation Market – By Region

The in-depth research report India Aviation Market covers the market in the country’s major regions: North India, South India, East India, and West India regions. South India region, particularly Bangalore, holds the largest share in the India Aviation Market and is expected to maintain its dominance during the forecast period. Known as the "aviation monopoly capital of India," Bangalore accounts for over 65% of the country's aerospace industry, hosting major global aerospace companies like Boeing, Airbus, Honeywell, and GE Aviation, along with key research and development centers. Historically, Bangalore was home to several major public sector enterprises such as NGEF, BEML, and BEL. It is also the headquarters of Hindustan Aeronautics Limited (HAL), which plays a significant role in the development and manufacturing of fighter aircraft like the Sukhoi 30 and Tejas for the Indian Air Force. Additionally, the National Aerospace Laboratories (NAL), focusing on civil aviation technologies, is based in the city. The establishment of a dedicated aerospace special economic zone near Kempegowda International Airport further solidifies Bangalore’s position as a hub for India's aviation sector. Despite the closure of airlines like Simplifly Deccan and Kingfisher Airlines, Bangalore continues to be a pivotal location for the aviation industry.

Competitive Landscape

Major players operating in India Aviation Market include SpiceJet, Air India, Air India Express, Hindustan Aeronautics Limited, IndiGo, Dassault, and Lockheed Martin Corporation. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In November 2024 - Vistara marked its final flight as it merged into Air India, officially ending its independent brand after nearly a decade in operation. Vistara was a joint venture of Tata Group and Singapore Airlines, known for pioneering of premium economy.

• In October 2024 - Air India and Singapore Airlines expanded their codeshare partnership to cover 51 additional destinations, including 11 within India and 40 internationally, boosting travel connectivity for both airlines’ customers.

• In September 2024 - Shankh Air, set to be Uttar Pradesh’s first scheduled airline, received approval from India’s Civil Aviation Ministry and will operate from hubs in Lucknow and Noida. Aiming to improve regional connectivity, it will serve high-demand interstate and intrastate routes.

Scope of the Report

By Aircraft Type

• Commercial Aviation

• Military Aviation

• General Aviation

By Type of Service

• Passenger Services

• Cargo Services

By Class

• Economy Class

• Premium Economy

• Business & First Class

By End User

• Commercial Airlines

• Government & Defense

By Region

• North

• South

• East

• West