India’s Aviation Sector: Status, Challenges & Way Ahead

• Once the crown jewel of Indian aviation, Air India, embodied by its regal Maharaja, lost its sheen due to years of bureaucratic inertia and operational decay. The Tata Group’s takeover in 2022 was seen as a fresh lease of life, but the airline still grapples with turbulence, from outdated aircraft to inconsistent service, hindering its ascent to global dominance.

India’s Airways Sector: Key Statistics

• Market Leadership: India has become the third-largest domestic aviation market, recording a 15% YoY growth with 376.43 million total air passengers in FY24.
• Expanding Market Size: The India Aviation Market is projected to grow from $14.78 billion (2025) to $26.08 billion (2030), at a CAGR of 12.03%. (IATA)
• Fleet Strength: ​As of March 2025, Indian airlines operate an estimated 941 aircraft, reflecting significant growth in the aviation sector.
• Women in Aviation: 15% of Indian pilots are women, three times the global average, making India a leader in gender inclusivity.
• Infrastructure Expansion: The number of operational airports has doubled from 74 in 2014 to 149 in 2024, with a target to increase capacity to 468 MPPA at metro airports. (AAI)
• Cargo & Freight Growth: India handled 3,365.65 MMT of freight in FY24, strengthening logistics and supply chains.
• Sustainable Aviation: 73 airports have transitioned to 100% green energy usage, aligning with India’s environmental commitments.

Credit: IBEF

Need for a Strong Airways Sector in India

• Growing Passenger Traffic: The surge in air travel demands rapid infrastructure expansion and efficient airport management.
• Strengthening Global Competitiveness: As the third-largest aviation market, India requires policy support for airline expansion and international alliances.
• Enhancing Regional Connectivity: With 103 non-scheduled airlines, further UDAN expansion is needed to improve last-mile connectivity. (MoCA)
• Advancing Logistics & Freight Management: Rising air cargo volumes highlight the need for cutting-edge freight infrastructure and streamlined supply chains.
• Sustainability & Innovation: Greater investment is needed in SAF, carbon neutrality, and green airport infrastructure to align with global environmental goals.

Challenges in India’s Airways Sector

• Grounded Fleet Crisis: Over 160 aircraft (~25% of the total fleet) remain non-operational due to financial struggles and supply chain disruptions, severely impacting airline capacity. (DGCA)
• Market Concentration & Financial Stress: A duopoly of IndiGo (60%) and Tata Group airlines (20%) limits competition, while airlines are projected to incur $1.6–1.8 billion losses in FY24 due to high fuel costs and weak financial structures. (IATA)
• Regulatory & Tax Burden: Aviation fuel taxes (40–50%), among the highest globally, along with outdated regulations like the Aircraft Act (1934) and airport monopolies, increase compliance costs and operational inefficiencies. (IATA)
• Low Air Travel Penetration & Manpower Shortages: With only 0.13 seats per capita, India’s aviation growth is constrained compared to China (0.49) and Brazil (0.57).
  • Additionally, a shortage of pilots, engineers, and cabin crew leads to increased turnaround times and flight delays. (IATA)
• Others: Delayed aircraft deliveries from Boeing and Airbus, unrealistic airline expansions (Kingfisher, Jet Airways, Go First), limited tier-2 & tier-3 connectivity despite UDAN, and insufficient sustainability measures hinder sectoral growth

Key Government Initiatives in India’s Civil Aviation Sector

1. UDAN (Ude Desh ka Aam Nagrik) (2016): Enhances regional air connectivity by subsidizing unserved and underserved routes, making air travel affordable for the common citizen. (MoCA)
2. National Civil Aviation Policy (NCAP) (2016): Strengthens domestic aviation, rationalizes MRO (Maintenance, Repair & Overhaul) taxation, and allows greater international expansion. (MoCA)
3. NABH (NextGen Airports for Bharat) Nirman: Focuses on modernizing and expanding airport capacity to meet growing passenger demand. (MoCA)
4. Make in India – Aviation: Promotes domestic aircraft components, systems, and airport infrastructure manufacturing. (DPIIT)
5. DigiYatra: Introduces biometric-based seamless travel to enhance airport efficiency and passenger experience. (MoCA)
6. GAGAN (GPS-Aided GEO Augmented Navigation): Improves flight navigation accuracy, enhancing operational safety and efficiency. (ISRO + AAI)
7. Krishi Udan Scheme: Provides subsidies for air transport of perishable agricultural products to boost farmer incomes. (MoCA)
8. Aircraft Leasing & Financing at GIFT City: Develops India’s domestic aircraft leasing ecosystem to reduce dependence on foreign leasing firms. (IFSCA)
9. Open Sky Policy: Liberalizes airspace for international carriers, encouraging global connectivity. (MoCA)
10. 100% FDI in Aviation: Allows full foreign investment in greenfield airports and up to 49% in airlines via automatic routes to attract global capital. (DPIIT)

Way Forward for India’s Airways Sector

“A common man who travels in slippers should also be seen in aircraft. This is my dream.” – PM Narendra Modi

• Airport Infrastructure Expansion: Develop new airports and modernize existing ones for increased capacity and efficiency.
• Boost Regional Connectivity: Strengthen the UDAN scheme and enhance last-mile air connectivity.
• ATF Tax Rationalization: Bring Aviation Turbine Fuel (ATF) under GST for cost reduction.
• Fleet Modernization & Indigenous Manufacturing: Promote aircraft leasing at GIFT City and develop domestic MRO facilities.
• Strengthening International Competitiveness: Improve bilateral air agreements and develop India as a global transit hub.
• Sustainable & Green Aviation: Scale up Sustainable Aviation Fuel & promote carbon-neutral airports.
• Others: Ensure financial stability, boost skill development, enhance cargo infrastructure, and elevate passenger experience through digitalization.

India’s aviation sector must shift its focus from merely “moving vehicles” to “moving people” by prioritising affordability, connectivity, & passenger experience. Strengthening infrastructure, rationalising costs, & embracing sustainability will position India as a global aviation hub, ensuring seamless mobility.

UPSC Mains PYQs – Theme – Aviation Sector

1. [UPSC 2017] The UDAN Scheme, launched in 2016, aims at making regional connectivity affordable. Discuss its significance and challenges in implementation.
2. [UPSC 2016] Discuss the role of the civil aviation sector in India’s economic growth. What are the key challenges faced by this sector?
3. [UPSC 2013] India is emerging as a major aviation market. Analyze the bottlenecks hindering its progress and suggest measures to overcome them.

Reference: New Indian Express | PMFIAS: UDAN Scheme

PMF IAS Pathfinder for Mains – Question 115

Q. Airport privatization in India has led to improved infrastructure and service quality but has also raised concerns over high user charges and regulatory oversight. Examine the pros and cons of privatizing airports and suggest measures to ensure accessibility, affordability, and regulatory accountability in the sector. (250 Words) (15 Marks)

Approach

• Introduction: Start with a data-driven statement showcasing the rapid growth of India’s aviation sector, highlighting privatization’s role in transforming infrastructure and service quality.
• Body: Discuss the benefits of privatization, while also addressing concerns like high user charges, monopolies, and regulatory challenges.
• Conclusion: Propose a balanced approach to ensure fair pricing, regulatory accountability, and inclusive growth across metro and regional airports, ensuring India’s airports become “runways of progress.”