India is expected to become the third largest aviation market by 2020 and is expected to be the largest by 2030.

Indian Aviation Industry

Latest update: November, 2015

Healthy Growth of Passenger Traffic

•Total passenger traffic stood at a 106.45 million in FY 2016*.  

•Passenger traffic increased by 12.47 per cent in FY 2015. 

•Growth in passenger traffic has been strong since the new millennium, especially with rising incomes and low-cost aviation; passenger traffic expanded at a CAGR of 3.8 per cent over FY 2006–16*. 

Passenger Traffic in FY15

Increase in Freight Traffic

•Freight traffic is expected to be five times the current level by the end of the next two decades. It is expected to be 11.4 million tonnes by 2032.

•Growth in import and export in India will be the key driver for growth in freight traffic as 30 per cent of total trade is undertaken via airways.

International freight traffic was 61 per cent of the total in FY15


Last Updated: November, 2015

SECTORAL REPORT | January, 2016


India’s civil aviation industry is on a high-growth trajectory. India aims to become the third-largest aviation market by 2020 and the largest by 2030. 

The Civil Aviation industry has ushered in a new era of expansion, driven by factors such as low-cost carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in domestic airlines, advanced information technology (IT) interventions and growing emphasis on regional connectivity. India is the ninth-largest civil aviation market in the world, with a market size of around US$ 16 billion.

 “The world is focused on Indian aviation – from manufacturers, tourism boards, airlines and global businesses to individual travellers, shippers and businessmen. If we can find common purpose among all stakeholders in Indian aviation, a bright future is at hand,” said Mr. Tony Tyler, Director General and CEO, International Air Transport Association (IATA).

Market Size

In the July-September quarter of 2015, domestic air passenger traffic surged 21.5 per cent to 20.12 million from 16.57 million in the corresponding period a year ago. Total passengers carried in September 2015 increased 13.24 per cent Y-o-Y to 8.73 million from 7.71 million in September 2014. International and domestic passenger traffic grew 6.6 per cent and 15.5 per cent, respectively, in September 2015.

In September 2015, total aircraft movements at all Indian airports stood at 145,628, which was 10.2 per cent higher than September 2014. International and domestic aircraft movements increased 7.5 per cent and 11 per cent, respectively, in September 2015.

Over the next five years, domestic and international passenger traffic are expected to increase at an annual average rate of 12 per cent and 8 per cent, respectively, while domestic and international cargo are estimated to rise at an average annual rate of 12 per cent and 10 per cent, respectively.

The airlines operating in India are projected to record a collective operating profit of Rs 8,100 crore (US$ 1.29 billion) in fiscal year 2016, according to Crisil Ltd.


According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI inflows in air transport (including air freight) between April 2000 and June 2015 stood at US$ 573.12 million.

Key investments and developments in India’s aviation industry include:

  • The Ministry of Civil Aviation has signed Memorandum of Understanding (MoU) with Finland, Kazakhstan, Kenya, Sweden, Norway, Denmark, Oman and Ethiopia for increased co-operation between the countries in terms of additional seats, sharing of airlines codes, increased frequencies and additional points of call, during the International Civil Aviation Negotiations (ICAN),2015 held in Antalya, Turkey.
  • Tata Advanced Systems (TASL) has signed a joint venture with American aircraft manufacturing major, Boeing, to establish a centre of excellence for manufacturing aerostructures for Apache helicopter initially and collaborate on integrated systems development opportunities in India in the long term.
  • US-based aircraft manufacturer Boeing plans to assemble one of its two helicopters namely, Chinook (heavy-lift) or Apache (attack type) in India, thus becoming yet another global company to invest in India encouraged by the ‘Make in India’ campaign.
  • Airbus SAS, one of the top two aircraft manufacturers in the world, plans to open aircraft maintenance and repair overhaul (MRO) facility in India.
  • Airbus, the world’s leading aircraft maker, expects India’s aviation industry to grow at over 10 per cent annually in the next decade, almost double the average growth rate of the global aviation industry.
  • Eyeing large orders from Indian airlines, Airbus has committed to source products worth US$ 2 billion cumulatively over the next five years from India; the company plans to provide customised maintenance and other services closer to the base for all its airline customers in India.
  • French drone-maker LH Aviation signed a Memorandum of Understanding (MoU) with India’s OIS Advanced Technologies on June 19, 2015 to manufacture tactical drones in India through an industrial license.
  • Mahindra Group expanded its partnership with GE Aviation by signing an agreement to manufacture aero structures at the Group’s new aerospace facility in Bengaluru.
  • IndiGo plans to file documents for an initial public offering within the next two months to raise US$ 400 million by selling 10 per cent stake.
  • SpiceJet plans to enter a deal with Boeing Co. and Airbus Group SE to buy 80-120 jet airplanes which would help to expand their fleet and rebuild its business.

Government Initiatives

Government agencies project that around 500 brownfield and greenfield airports would be required by 2020. The private sector is being encouraged to become actively involved in the construction of airports through different Public Private Partnership models, with substantial state support in terms of financing, concessional land allotment, tax holidays and other incentives.

Some major initiatives undertaken by the government are:

  • The Airports Authority of India (AAI) plans to revive and operationalise around 50 airports in India over the next 10 years to improve regional and remote air connectivity.
  • The Government of India, in its draft civil aviation policy released for inputs from stakeholders, has proposed raising Foreign Direct Investment (FDI) limit in domestic airlines from the current 49 per cent to over 50 per cent, along with other reforms such as tax incentives for airlines, incentives for travellers to fly to small towns at affordable rates, and easing the norms for domestic carriers to operate abroad.
  • Gujarat is expected to get a second international airport at Dholera. The state government has formed Dholera International Airport Co. Ltd. and is obtaining approvals from the union government.
  • The Directorate General of Civil Aviation (DGCA) has given its approval to Air India’s maintenance, repair and overhaul (MRO) unit.
  • The Government of India has decided to award airports in Kolkata, Chennai, Jaipur and Ahmedabad on management contract. AAI has issued the ‘Request for Qualification’ document for these four airports.
  • The Government of India plans to form a committee comprising bankers, aviation experts and technocrats to help turn around and privatise the national airline, Air India.
  • The Government of India approved a proposal to set up a second airport in the National Capital Region.
  • The Government of India expects to finalise the new aviation policy and revised international flying norms for domestic carriers soon; the government may remove the ‘5/20’ norms for domestic airlines in this new policy.

Road Ahead

India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for majority of the country’s population, of which nearly 40 per cent is the upwardly mobile middle class. 

The industry stakeholders should engage and collaborate with policy makers to implement efficient and rational decisions that would boost India’s civil aviation industry. With the right policies and relentless focus on quality, cost and passenger interest, India would be well placed to achieve its vision of becoming the third-largest aviation market by 2020 and the largest by 2030.

Exchange Rate Used: INR 1 = US$ 0.0151 as on November 15, 2015

References: Media Reports, Press Releases, Press Information Bureau, Directorate General of Civil Aviation (DGCA), Airports Authority of India (AAI)

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.


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