Aviation Sector in India |ForumIAS

The Indian aviation sector has grown rapidly, emerging as one of the world’s busiest domestic markets. But the IndiGo crisis of December 2025, with over 2,000 flight cancellations, exposed major gaps in operational planning and regulatory readiness. Triggered by an acute crew shortage following the rollout of new Flight Duty Time Limitation (FDTL) norms.

Table of Content

Aviation Sector in India
Status of India’s Aviation Sector
Potential of India’s Aviation Sector
Challenges in India’s Aviation Sector
Government Initiatives for Aviation Sector in India
Way Forward

Aviation Sector in India

Aviation in India encompasses both military and civil segments, with the civilian aviation sector emerging as one of the world’s most dynamic markets. India has already become the third-largest domestic aviation market globally. According to International Air Transport Association (IATA), the country is poised for even greater growth, set to surpass the US and China to become the world’s third-largest air passenger market by 2030. This rising demand is driving rapid fleet expansion, with India’s aircraft count expected to reach around 1,100 by 2027.

Status of India’s Aviation Sector

India recorded 376.43 million air passengers in FY24, growing at 15% YoY, with daily passengers crossing 5 lakh in 2024.
The sector contributes 5% to GDP, supports 4 million jobs, and adds $72 billion in gross value to the economy.
Fleet strength stands at 941 aircraft (2025), while 162 airports (up from 74 in 2014) are operational, with metro capacity targeted to reach 468 MPPA.
India handled 3,365.65 MMT air cargo in FY24, strengthening logistics and e-commerce supply chains.
India leads globally in gender diversity with 15% women pilots (3× global average).
Sustainability advances include 73 airports using 100% green energy.

Potential of India’s Aviation Sector

High-growth market: Aviation market set to expand from $14.78 bn (2025) to $26.08 bn (2030) at 12% CAGR (IATA).
Balanced regional development: Enhanced connectivity in the North-East and aspirational districts.
Tourism multiplier: Aviation drives hospitality, transport, and local economies.
Aerospace & MRO expansion: Rising fleet enables growth of indigenous MRO and aerospace manufacturing.
FDI & infrastructure expansion: Nearly $3 bn FDI, large Greenfield projects (Navi Mumbai, Jewar).
High skill demand: Need for 10,900 pilots by FY30 along with engineers and crew.
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Challenges in India’s Aviation Sector

Grounded Fleet: Over 160 aircraft (~25%) grounded due to financial stress, OEM delays, and safety issues.
Market Duopoly & Financial Stress: IndiGo (60%) and Tata Group (20%) dominate; airlines may face $1.6–1.8 bn losses (FY24).
High ATF Taxes: 40–50% tax burden among the highest globally raises operating costs.
Regulatory Bottlenecks: Outdated frameworks (now replaced) like the Aircraft Act 1934; airport monopolies limit competition.
Low Per-Capita Air Travel: 0.13 seats per capita, far below China (0.49) and Brazil (0.57).
Crew & Technical Shortages: Pilot, engineer, and cabin crew deficits cause flight delays and operational disruptions.
Connectivity Gaps: Tier-2/3 cities remain underserved despite UDAN.
Environmental Pressure: Compliance with CORSIA, need for greener fuels and technologies.
Operational Risks: Accidents (e.g., Air India crash in Ahmedabad) highlight safety concerns.
Unrealistic Airline Expansions: Failures of Jet Airways, Kingfisher, Go First due to inflated growth plans.

Government Initiatives for Aviation Sector in India

National Civil Aviation Policy (NCAP)	Expands international operations; boosts MRO; promotes market liberalisation and regional connectivity.
UDAN Scheme	Enhances regional air connectivity; 619 routes, 88 airports operational; expanding to 120 new destinations.
DigiYatra	Paperless, biometric-enabled seamless passenger processing.
Open Sky Policy	Liberalises airport sector; major airports under PPP mode; boosts private participation.
Open Sky Air Service Agreements	Allows unlimited flights between partner countries; enhances bilateral air traffic.
FDI Policy	100% FDI for greenfield airports; 74% automatic route for brownfield; boosts private investment.
Tax & Duty Exemptions	10-year tax exemption for airport projects; full customs exemption for MRO services.
GAGAN Navigation System	Satellite-based augmentation enhancing precision navigation and flight safety.
Bhartiya Vayuyan Adhiniyam (2024)	Modernised aviation regulation; replaced Aircraft Act 1934; aligned with global standards.
Protection of Interest in Aircraft Objects Bill	Aligns leasing laws with global norms; reduces aircraft leasing costs.
NABH Nirman	Expands airport capacity; modernises infrastructure across major airports.
Krishi Udan	Enhances air transport of perishable agricultural goods for farmers.

Budget 2025–26: Provisions for the Aviation Sector

Strengthening Regional Connectivity: The Budget expands the UDAN scheme, targeting 120 new destinations and aiming to attract 4 crore additional passengers over the next decade.
Airport Infrastructure Development: Major upgrades include the expansion of Patna Airport and development of a brownfield airport at Bihta (Bihar), alongside continued support for Greenfield airport projects nationwide.
Support for Smaller Airports: Increased focus on helipads and small airports in hilly, Northeastern, and aspirational districts to improve last-mile air connectivity.
Budgetary Allocations: The Ministry of Civil Aviation receives ₹2,400.31 crore, slightly reduced from the previous year’s allocation of ₹2,658.68 crore.
- UDAN funding lowered to ₹540 crore (from ₹800 crore), indicating a shift towards efficiency-driven implementation.
Policy Continuity: Infrastructure push aligns with broader reforms such as leasing at GIFT City, DigiYatra expansion, and airport modernization efforts under NABH Nirman.

Way Forward

Infrastructure Expansion: Build new airports, expand metro hubs, modernize regional airports.
Strengthen Regional Connectivity: Deepen UDAN, boost last-mile air links in hilly and NE regions.
ATF Tax Reform: Bring ATF under GST to reduce operational costs.
Fleet & Manufacturing Push: Boost leasing at GIFT City; scale up MRO and aerospace manufacturing.
Improve Global Competitiveness: Strengthen bilateral agreements; develop India as a global transit hub.
Sustainable Aviation: Promote SAF, carbon-neutral airports, and energy-efficient technologies.
Skill Development & Safety: Expand aviation training institutes; strengthen DGCA oversight.
Digital Air Travel Ecosystem: Enhance DigiYatra, AI-based traffic management, and paperless systems.

Conclusion

India’s aviation sector is at a pivotal moment shifting from a capacity-constrained market to a potential global aviation hub. Ensuring affordability, expanding connectivity, modernising infrastructure, rationalising fuel taxes, and promoting sustainability will be central to harnessing India’s enormous demand. With continued reforms and resilient operational planning, India can transform its aviation ecosystem from merely “moving vehicles” to “moving people”, driving inclusive economic growth and global competitiveness.