India is poised to become the world’s leading aviation market, surpassing the United States and China by the end of the decade.
The Civil Aviation Secretary in India made an announcement of the country’s plans for expanding air connectivity to increase accessibility for the population during the CAPA India Aviation Summit.
Status of India’s Aviation Sector
India’s Civil Aviation is among the fastest-growing aviation markets globally and will be a major growth engine to make India a USD 5 trillion economy by 2024. India is currently the world’s 3rd-largest civil aviation market.
Over the past 6 years, India’s domestic passenger traffic has grown at a compound annual growth rate (CAGR) of around 14.5% and international passenger traffic at around 6.5%. India’s domestic passenger traffic is projected to rise to 16 crores in the 2023-24 fiscal year and to 35 crores by 2029-30.
Recent Government Initiatives Related to Aviation Sector
- India’s government aims to establish 6 major metropolitan cities as international hubs for air travel.
- National Civil Aviation Policy (NCAP) 2016
- UDAN Scheme
High Operating Costs
One of the major challenges for the Indian aviation sector is the high operating costs. This is due to a number of factors such as high fuel prices, airport charges, and taxes.
For airlines, the increase in jet fuel prices represents a major challenge as this cost typically accounts for 20% to 25% of total operational costs.
The Indian aviation sector also faces infrastructure constraints such as limited airport capacity, lack of modernized air traffic control systems, and inadequate ground handling facilities.
The Indian aviation sector also faces challenges related to the regulatory framework. The sector is heavily regulated, and airlines have to comply with a number of rules and regulations through different windows, which can be complex and time-consuming.