Why India’s Aviation Expansion Is a Focal Point for Global Stakeholders

India’s aviation industry, the world’s third-largest domestic market, is capturing global attention for its rapid growth and potential to lead in connectivity, aerospace manufacturing, and sustainable aviation. With plans to expand its airport network from 162 to as many as 350 by 2047 and airlines ordering over 2,000 aircraft to meet surging demand, India is a prime target for investors and industry players. Significant investments, strategic partnerships, and a young population drive this growth, though challenges like high costs and infrastructure constraints remain.

A Market in Strong Growth

India’s aviation sector is thriving, fueled by a young population (median age 28.7), rising incomes, and government policies. In 2024, domestic airlines carried over 153 million passengers annually, with daily peaks exceeding 505,000, reflecting a 14.5% compound annual growth rate (CAGR) from FY14 to FY20. The market, valued at USD 14.78 billion in 2025, is projected to reach USD 26.08 billion by 2030, with a 12.03% CAGR. By 2036, annual passenger numbers could reach 478 million, potentially outpacing Japan and Germany combined.

The sector contributes 1.5% to India’s GDP and supports 7.7 million jobs.

The Regional Connectivity Scheme (RCS-UDAN), launched in 2016, has operationalised 519 routes and 76 under-served airports, making air travel affordable in tier-2 and tier-3 cities. IndiGo, with a 64% market share, leads the low-cost carrier segment, while international connectivity is robust, with air service agreements with 116 countries and air bubble deals with 35. This positions India as a leader in regional aviation connectivity.

Investments

India’s aviation sector is attracting significant investment, with USD 25 billion projected by 2027 for airports, aircraft, and maintenance, repair, and overhaul (MRO) facilities.

• Airport Expansion: The Airports Authority of India (AAI) and private developers are investing USD 12 billion over the next five years to modernise airports. From 74 operational airports in 2014, India now has 162, with a target of 350 by 2047. Key projects include the USD 2.22 billion Navi Mumbai International Airport (NMIA), set to open in August 2025, and the Jewar airport, both under public-private partnerships (PPPs). The National Monetisation Pipeline is privatising 25 airports to boost efficiency.

  
  

• Aircraft Orders: Indian airlines have ordered over 2,000 aircraft, including options. In 2023, Air India ordered 470 planes from Airbus and Boeing (40 A350-900/1000, 20 B787s, 10 B777Xs), followed by 100 additional Airbus planes in December 2024. IndiGo ordered 500 aircraft, including 30 firm A350-900s with options for 70 more, pushing its order book past 1,000. CAPA India projects another 1,300 orders in the coming years, reflecting strong demand.

  
  

• MRO and Training: India’s MRO sector, with 85% of work outsourced abroad at USD 2 billion annually, is growing with reduced GST (from 18% to 5%) and 100% foreign direct investment (FDI). IndiGo’s 31-acre MRO facility at Bengaluru airport, announced in May 2025, will support its A350 fleet from 2027. Air India’s Amravati training academy, opened in January 2025, will train 800 pilots yearly, and GMR’s INR 50 crore aviation school is producing engineers. India aims to capture a USD 4 billion share of the global MRO market by 2031.

  
  

FDI in aviation reached USD 3.93 billion from April 2000 to December 2024, supported by policies allowing 100% FDI in MRO and manufacturing.

Partnerships

Strategic partnerships are strengthening India’s aviation sector.

• International Collaborations: Air India’s codeshare with Kenya Airways enhances African connectivity, while IndiGo’s agreement with Garuda Indonesia adds 17 destinations in Indonesia. Tata and Airbus produce aircraft components locally, and Boeing sources from Indian suppliers, boosting India’s aerospace manufacturing role.

  
  

• Public-Private Partnerships: PPPs have grown from five airports in 2014 to 24, with operators like GMR and Adani running facilities in Hyderabad, Delhi, and Navi Mumbai. Akasa Air’s partnership with Adani Airport Holdings for NMIA operations, starting with 15 flights in August 2025, is a recent example.

  
  

• Make in India: The “Make in India” initiative drives local production. Hindustan Aeronautics Limited (HAL) and Airbus are establishing manufacturing units, while Garuda Aerospace’s USD 11.6 million “Drone City” in Andhra Pradesh targets drone technology leadership.

  
  

Challenges: What to expect?

Despite its growth, India’s aviation sector faces challenges:

• High Costs: Aviation turbine fuel (ATF), heavily taxed, accounts for 40–45% of airline costs, compared to 20–30% globally. Volatile prices and limited hedging strain profits, with global airline margins at 3.7% in 2025.

  
  

• Infrastructure Constraints: Airports like Mumbai and Delhi are over capacity, with Mumbai handling 45 flights per hour on one runway. Military control over 40% of airspace forces inefficient flight paths, increasing fuel costs.

  
  

• MRO Development: The underdeveloped MRO sector raises costs and downtime. Achieving global certifications andscaling investment are critical.

  
  

• Workforce Needs: Pilot shortages and fatigue concerns require expanded training and balanced regulations.

  
  

• Sustainability: Aviation contributes 2.5% of global CO₂ emissions, and India’s growth could increase this. Sustainable aviation fuel (SAF) is 3–5 times costlier, but India’s ethanol production offers potential, with SAF production expected by 2026.

  
  

• Regulatory Hurdles: Non-ratification of the Cape Town Convention raises leasing costs, and DGCA regulatory inconsistencies need streamlining.

  
  

Recent milestones highlight India’s aviation progress:

• June 2025: The 81st IATA Annual General Meeting (AGM) in Delhi showcased India’s rise, with IATA’s Director General Willie Walsh praising IndiGo and Air India’s investments and government focus on infrastructure. Prime Minister Narendra Modi invited global aviation firms to invest, citing UDAN’s success and India’s third-largest market status.

  
  

• June 2025: IndiGo reported record Q4 2024 profits, driven by strong demand and new routes, reinforcing its market leadership.

  
  

• June 2025: Mumbai’s Chhatrapati Shivaji Maharaj International Airport (CSMIA) announced a full shift to green electricity in FY 2024–25, setting a benchmark for sustainable airport operations.

  
  

• May 2025: IndiGo’s 31-acre MRO facility at Bengaluru airport was announced, a strategic move to support its A350 fleet and reduce outsourcing.

  
  

• April 2025: Mangaluru International Airport hit a record 217,893 passengers in April 2025, reflecting strong regional growth under UDAN.

  
  

Further growth in the very near future:

• Airport Openings: NMIA will begin operations in August 2025, handling 20 million passengers initially, and Jewar’s first phase is expected by late 2025. The government aims to add 50 airports by 2030.

  
  

• Aircraft Orders: Airlines like Akasa Air and SpiceJet may place significant orders by 2026, following Air India and IndiGo.

  
  

• MRO Growth: New facilities by Adani, Tata, and IndiGo are expected by 2026, reducing outsourcing. Air India’s Bengaluru MRO aims to cut foreign reliance by 20% by 2027.

• Sustainability: SAF production is slated to start in 2026, with government support leveraging India’s ethanol expertise.

  
  

• Global Hub: Delhi’s Indira Gandhi International Airport, ranked among the top 10 global hubs in 2024, supports India’s ambition to become a transit hub like Dubai.

India’s aviation market is certainly a global leader in the making, driven by huge investments, strategic partnerships, and strong demand. Verified milestones like the Navi Mumbai airport’s progress, IndiGo’s MRO facility, and Mumbai’s green energy shift highlight this. With a growing middle class and plans for 350 airports by 2047, India will likely excel in connectivity, manufacturing, and sustainable aviation. Addressing high costs, infrastructure gaps, and green challenges will be key, but with the IATA AGM last week - showcasing India’s potential, the sector is heading in the right direction.

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