The Indian aviation sector has been experiencing great growth over the past decade, shifting from a privilege for the elite in the early 2000s to what is now known as the world’s third-largest domestic aviation market. Domestic air traffic reached nearly 97% of pre-COVID levels during the fiscal year 2022-23, with South Asia accounting nearly 69% of total airline traffic through domestic flights. With India’s population nearing 1.4 billion, it is home to the fastest-growing air passenger market worldwide, driven by infrastructure developments and expected passenger numbers rising annually from 158 million in 2017 to an estimated 572 million by 2037, largely due to the expanding middle-class demographic. This article explores India's increasing significance in the global passenger market.
Economic growth and middle-class expansion
On a global scale, the middle class currently stands as the largest spender. Projections indicate that by 2030, India will rank as the fourth-largest global spender on travel. Reports from Booking.com-McKinsey & Company and People Research on India’s Consumer Economy-India’s Citizen Environment (PRICE-ICE) suggest that by then, the middle class, empowered with increased purchasing power, will constitute 47% of India's population.
Source: PIB and indiabudget.gov.in
India's young population will also play a significant role in making the country more attractive to global tourism stakeholders. India's population, at a median age of 28.2 years, is more than 10 years younger than that of major economies. According to the United Nations World Tourism Organization, India ranks among the top three fastest-growing outbound tourism markets.
Passenger growth
There is a remarkable revival in aviation, motivated by an increase in travellers. The domestic and international air travel industries are both experiencing an unprecedented surge in passenger numbers, signalling a strong recovery and promising future for the sector.
Source: DGCA
Source: DGCA
Source: PIB
From January to September 2023, local airlines carried 112.86 million passengers, up 29.10% from the 87.42 million passengers transported during the year-ago period. Likewise, within these nine months’ time, carriers moved 45.99 million international consumers which show an amazing rise of 39.61% against the corresponding period of last year’s 32.94 million passengers.
Global hub status
The government will take the lead in infrastructure improvements and implementing regulatory measures. By 2025, the government plans to invest US$ 12 billion in constructing new airports and refurbishing existing ones to accommodate increased passenger traffic and enhance regional connectivity. The number of airports in the country rose from 74 in 2014 to 148 in 2023, with the government targeting 220 operational airports by 2025. At present, India's six major airports – Delhi, Mumbai, Chennai, Kolkata, Bengaluru, and Hyderabad – collectively have the capacity to cater to 192 million passengers annually; this figure is projected to rise to 420 million in the coming years, according to Civil Aviation Minister Mr. Jyotiraditya Scindia. Through the ongoing expansion initiative, Delhi Airport's capacity was scheduled to increase from 70 million to 100 million passengers by the end of 2023.
Delhi emerges as a prime contender to become India’s inaugural international hub
Currently, four Indian airports – Mumbai, Bengaluru, Delhi, and Hyderabad – equipped with top-tier infrastructure, are actively drawing long-haul traffic and functioning as ‘hubs’. Because of its large size and population, India could potentially accommodate multiple hubs, like Europe, instead of just one.
At first, Indian government plans to recognize Delhi’s Indira Gandhi International Airport (IGIA) as the country’s leading global aviation hub. IGIA, India’s busiest airport, serves as the primary transit point for South Asian travellers, accommodating 65.33 million passengers in FY22-23, including 15.65 million foreigners (constituting 27.5% of India’s total international traffic). Operating 0.44 million flights (equating to 1,200 flights daily), including ~91,000 international flights, the airport maintains direct connections to over 142 domestic and international destinations spanning six continents.
With its catchment area covering 70% of Indian airports, IGIA features a balanced mix of business and tourist destinations, making it the preferred choice for international airlines commencing operations in India. It commands a substantial market share of air traffic volume to destinations across the Middle East, Europe, Asia, and the US. Additionally, IGIA stands as the largest cargo airport in both India and South Asia, with an annual cargo handling capacity of 2.0 million metric tonnes.
Expanding reach through partnerships
Following its acquisition by Tata, Air India is well positioned for a substantial revival in the Indian aviation market, positioning itself ahead of competitors domestically and internationally. Air India is putting all its might to revamp its cargo and freight operations both in India and abroad. Air India has entered into codeshare agreements with several airlines across the world, enabling Air India customers seamless connections to more destinations with a single itinerary. Adding to its list of partners, Air India has recently announced partnerships with United Airlines, Lufthansa, Air Canada, Jetstar Airways, Air New Zealand, Qantas Airways, and Virgin Australia International Airlines.
In less than no time, Vistara has managed to establish a customer base that is loyal to the brand and as a result, different international airlines that are eyeing expansion in India have come to trust it. Some of the codeshare partners of Vistara include British Airways, Lufthansa, Japan Airlines, Air Canada, Swiss Air, and United Airlines among others besides Singapore Airlines. Just like Indigo has partnered with Turkish Airlines and now it covers more than 30 destinations in Europe through them. Apart from these associations, Indigo has also signed codeshare agreements with British Airways, Qatar Airways, American Airlines, and Qantas offering more connectivity options and better service offerings.
Infrastructure development
As economic centres, airports have a central part to play in national economies. The essential nature of the airport infrastructure as an element of the overall transportation system directly affects the level of international competitiveness for any country and investment inflows. In this regard, Mr. Jyotiraditya Scindia, Union Minister for Civil Aviation and Steel, shared the intentions to transform the airport infrastructures across key Indian cities. The minister added that in phase 1, priority is being given to six metros across the country with a focus on capacity enhancement at these airports.
During phase 2, the number of airports experiencing congestion will increase to a total of 10, that is Bhubaneshwar, Chandigarh, Goa, Patna, Guwahati, Lucknow, Jaipur, Ahmedabad, Thiruvananthapuram, and Kochi. The new terminal buildings in Lucknow, Guwahati, and Patna are going to be launched by the minister shortly so that the needs of passengers will be better met and the growing demand for air transport in these areas can be catered to as well.
In addition, the minister unveiled ambitious projects, with new airports in Jewar and Navi Mumbai anticipated to commence operations by October-November of 2024. These airports constitute vital components of the government's strategic vision to enhance air connectivity and address soaring demand for air traffic.
Government initiatives
The government's commitment to promoting aviation growth has been essential in driving this story of success. A set of well-planned strategic initiatives has been launched to strengthen the industry and realise its full potential.
Source: PIB
Proactive infrastructure development
India’s aviation industry has witnessed notable growth during the period of nine years. The number of operational airports has doubled in the time, from 74 in 2014 to 148 as of April 2023, thus enabling them to expand their coverage and attract more air travellers. This progress can be mainly attributed to government policies and initiatives. An instance is the Regional Connectivity Scheme - Ude Desh ka Aam Nagrik, launched in 2016, which seeks to connect remote and underserved airports throughout India by refurbishing existing airstrips and building new ones where needed. In addition to that, Indian authorities are committed towards sustainability.
The latest milestones achieved at the Delhi and Mumbai airports show that commitment, with both having achieved the highly regarded Level 4+ Carbon Accreditation. This honour underscores their focus on minimizing carbon emission levels and fostering sustainable aviation standards.
Regional Connectivity Scheme
Regional Connectivity Scheme (RCS), also known as Ude Desh ka Aam Nagrik (UDAN), is central to this growth. During the last six years, the program has had several successful editions aimed at predominantly connecting unconnected and under-serviced areas all over India. Through upgrading underutilized airstrips and airports, UDAN’s main goal is to ensure that essential air travel becomes accessible even to remote areas, thus simultaneously fostering regional economic development.
UDAN will enable all Indian citizens to fly with equal rights by implementing a 10-year operational plan. The RCS-UDAN has been the major factor in accelerating the civil aviation sector, which is evident with the birth of four new successful airlines within the last six years. The scheme has facilitated airline operators in launching operations and establishing sustainable business models. It also offers opportunities for small regional airlines to expand their operations. The successful operation of these airlines underscores the creation of a favourable ecosystem for the airline business, highlighting the effectiveness of the UDAN scheme.
Carbon neutrality initiatives
The Ministry of Civil Aviation (MoCA) has initiated programmes aimed at advancing carbon neutrality and achieving net zero carbon emissions at airports throughout the nation by standardising the Carbon Accounting and Reporting framework for Indian airports. In pursuit of this objective, airport operators engaged in scheduled operations have been advised to evaluate carbon emissions at their airports and move towards carbon neutrality and net zero emissions through a phased approach.
The MoCA is actively encouraging the collaboration of developers of new greenfield airports with the respective state governments to prioritise net zero emissions and carbon neutrality in their development plans.
Owing to the efforts of the Indian government, airports such as Mumbai, Delhi, Bengaluru, and Hyderabad have achieved Level 4+ and higher Airports International Council (ACI) Accreditation, positioning them as carbon-neutral entities. In addition, 66 Indian airports now rely entirely on green energy sources for their power needs.
Enhancing user experience
The MoCA emphasizes the necessity of complying with global international travel standards to facilitate expedited travel. Exploring modifications in airport design and adopting advanced technologies for streamlining immigration and security check processes are crucial steps towards realising the vision of establishing international aviation hubs in India.
Conclusion
India's significant progression in the aviation sector, particularly within the global passenger market, marks a crucial evolution in its economic and strategic stature on the international stage. The transition to the world's third-largest domestic aviation market is driven by a robust increase in the middle-class population, enhanced air connectivity and substantial investments in airport infrastructure, with a strategic plan to expand to 220 operational airports by 2025. India is becoming increasingly important in global aviation discussions and is reinforcing its crucial role in the international passenger market. This is due to a young demographic, rising disposable income and a growing preference for air travel. Government initiatives such as RCS-UDAN have been instrumental in making air travel more accessible to a wider demographic, contributing to a democratised and inclusive growth model. Moreover, India's focus on sustainability and airport modernisation reflects a commitment to responsible aviation practices. The measures taken to improve the quality of infrastructure and the increase in demand for tickets are indications of Indian ambition not only to enter but also to become a leader in the international passenger market. Thus, the trajectory not only reveals India’s increasing significance but also the opportunity that exists for India to revolutionize the worldwide airline business, making it one of its major stakeholders with a significant impact on policies and other operational aspects.