India's aviation industry has undergone significant growth and transformation over the past decade. In the early 2000s, air travel in India was a luxury, only accessible to the affluent few. Today, India has become the third-largest domestic market in the world, behind only the United States and China, with more people choosing to travel by air than ever before. The domestic air traffic has again picked up pace during FY22-23 and is expected to reach around 97 percent of the pre-covid level.
In the past eight years, the number of operational airports in the country has risen from 74 to 140. The government plans to develop and operationalise 220 airports in the next five years. India is currently the seventh largest civil aviation market in the world and is expected to become the third-largest civil aviation market within the next 10 years.
The growth of the Indian aviation industry has been driven by a combination of factors, including liberalisation of the sector, increased competition, and government initiatives to boost air connectivity. One of the primary drivers of growth in the Indian aviation industry has been the liberalisation of the sector. In the 1990s, the Indian government opened up the aviation industry to private players, which led to the entry of several new airlines. Today, there are several major players in the Indian aviation industry, including IndiGo, SpiceJet, Air India, and Vistara. Another factor that has contributed to the growth of the Indian aviation industry is increased competition. The entry of low-cost carriers like IndiGo and SpiceJet has made air travel more affordable for a larger portion of the population. This has led to an increase in passenger traffic, particularly on domestic routes. In addition, airlines have introduced various incentives and loyalty programs to attract and retain customers.
The Indian Government is proactively supporting the aviation sector by providing a stable policy environment and incentivising competition-led growth. The Government has approved the 'Revival of unserved and under-served airports' scheme for the revival and development of 100 unserved and under-served airports, helipads, and water aerodromes by 2024. KrishiUdan 2.0 is a scheme that focuses on transporting perishable food products from hilly areas, north-eastern states, tribal areas, and other areas. 58 airports have been identified under this scheme to incentivize movement of air cargo. The Airports Authority of India (AAI) and other airport developers have taken up the development of new and existing airports with a projected capital expenditure of approximately INR 98,000 crore in the next five years. The Union Budget 2023-24 allocated an amount of INR 1,244.07 crore for Regional Connectivity Scheme (UDAN). The National Civil Aviation Policy is another initiative aimed at promoting growth in the aviation sector by providing incentives for the development of airport infrastructure, reducing taxes, and simplifying regulations. With up to 100 percent FDI permitted in Greenfield and existing airport projects and for MRO (maintenance and repair organisations) under the automatic route, India is attracting investors to the sector.
Air India made a historic announcement on 14 February 2023 by signing a deal with Boeing and Airbus to buy 470 aircraft worth $ 70 billion, marking the largest order in aviation history. This is also Air India's first order since 2005, and comes at a time when the Indian aviation industry is seeing a surge in passenger traffic.
Looking ahead, the future of the Indian aviation industry is bright. The sector is expected to see significant growth in the coming years, particularly in the areas of international travel and cargo. The government's continued efforts to boost air connectivity and infrastructure development are expected to further drive the growth of the sector. Additionally, technological advancements, such as the use of artificial intelligence and automation, are expected to bring greater efficiency and cost savings to the industry.