Prime Minister Narendra Modi’s prominent presence at the International Air Transport Association (IATA) annual meeting this week highlights the central role aviation is expected to play in India’s broader development strategy. Yet, as India positions itself for global prominence in air travel, the sector faces mounting operational and regulatory headwinds.
Despite ongoing global volatility in the aviation sector—fueled by trade uncertainties and weakened consumer sentiment—India’s major carriers remain bullish. Airlines continue to invest aggressively in fleet expansion, building on historic aircraft orders placed over the past two years. However, industry leaders caution that India’s impressive growth trajectory could stall without critical reforms and infrastructure upgrades.
Participants at the IATA gathering in Delhi raised concerns about persistent issues, including aircraft shortages, underdeveloped maintenance capabilities, and high operating costs driven by fuel taxes and airspace restrictions. Hostilities with neighbouring Pakistan have forced Indian airlines into costly detours, increasing fuel consumption and adding to passenger management burdens.
Airline executives are lobbying for policy relief, seeking tax exemptions and fee waivers, though the government’s willingness to intervene remains unclear. This comes in contrast to New Delhi’s stated ambition of transforming India into a job-generating global aviation hub, akin to Dubai, which currently channels a significant portion of India’s international traffic.
“In the coming years, the aviation sector is expected to be at the centre of massive transformation and innovation, and India is ready to embrace these possibilities,” Prime Minister Modi told industry leaders on Monday.
Realising this vision will require extensive capital investment—potentially running into billions of dollars—to modernise airport infrastructure and streamline regulatory frameworks.
India Aims High, but Performance Lags
India, already the world’s third-largest aviation market by seat capacity after the United States and China, is poised for exponential growth. According to IATA, passenger traffic in India is projected to triple over the next two decades. The government has set an ambitious target to increase the number of operational airports from 157 in 2024 to 400 by 2047.
“We are fast emerging as a strategic connector country … India is a natural connector of the skies and aviation as well,” said Civil Aviation Minister Ram Mohan Naidu, addressing global airline executives in New Delhi.
Yet, there remains a notable gap between potential and performance. India, the world’s most populous nation with 17.8% of the global population, accounts for just 4.2% of air passengers. In 2024, India registered a record 174 million domestic and international travellers—well behind China’s 730 million.
“The outlook is potentially very positive for both the Indian economy and air transport industry. However, such outcomes are not guaranteed,” IATA noted in a recent assessment.
Structural limitations continue to weigh down progress. Industry stakeholders argue that existing regulations require modernisation to support sustainable growth.
“Even the regulators will agree that they need to update their regulation, because there is a reason why India is not punching above its weight. In fact, it is punching very much below its weight,” said Subhas Menon, Director General of the Association of Asia Pacific Airlines.
Global competitors are also calling for India to liberalise its market. Emirates President Tim Clark pointed to demand outstripping available capacity, stating, “For every seat we offer, particularly in the peaks, we’ve got three to ten people trying to get it.”
Maintenance capacity is another bottleneck. India lacks sufficient domestic maintenance, repair, and overhaul (MRO) infrastructure, leaving its fleet heavily reliant on overseas facilities amid global shortages. “Airframe maintenance is a huge opportunity for India because you require labour and skills—and that’s something India is investing in,” said IATA Director General Willie Walsh.
Compounding these challenges are delays in the delivery of next-generation, fuel-efficient aircraft due to global supply chain disruptions. IndiGo, India’s largest airline, has turned to aircraft leasing to support its international expansion. It has also signed strategic partnerships with Air France-KLM, Virgin Atlantic and Delta to extend its global reach through shared networks.
As India accelerates its push to become a global aviation powerhouse, the path forward will demand pragmatic policy reform, infrastructure enhancement, and a regulatory ecosystem conducive to international competitiveness.
-Reuters
