Why Civil Aviation?
The civil aviation industry has been one of the fastest-growing industries in the country during the last three years. India has 136 operational airports and is set to construct an additional 80 airports over the next five years. Domestic traffic contributes around 69% of the total airline traffic in South Asia. The country is the third-largest domestic aviation market, with Indigo being the largest airline company in India. The air traffic movement stood at 327.3 million in FY23. During April-September 2024, domestic passenger traffic stood at 160 million, and international passenger traffic stood at 37 million.
India is set to overtake China and the US in the air passenger market by 2030. The total number of airplanes operating in the economy is expected to reach 1,100 by 2027. The Indian aviation industry is projected to see year-on-year revenue growth of 10%-15% in FY25.
The industry is crucial to cargo and freight transport. During FY16 to FY24, domestic freight traffic increased at a CAGR of 3% and international freight traffic increased at a CAGR of 2.7%. In April-September 2024, domestic freight traffic was 696 thousand tons and international freight traffic was 1,167 thousand tons. In FY24, capacity (Available Seat Kilometers) available in domestic flights increased to 162,289 million km, resulting in a subsequent increase in demand (Revenue Passenger Kilometer) for domestic services to 148,251 million km.
The Government of India is proactively contributing towards the construction of new airports, with a motive to cater to the rising air traffic. The total number of operational airports is anticipated to reach 220 by 2025. The Cabinet Committee on Economic Affairs approved the Airports Authority of India's proposal to develop a New Civil Enclave at Bagdogra Airport in Siliguri, West Bengal, at an estimated cost of $185.7 million.
Robust Demand
The demand for air travel is rising owing to the rise in the middle–class and the increasing disposable income. India is anticipated to require over 2200 aircraft by 2042.
MRO Opportunities
The Maintenance, Repair, and Operations (MRO) industry is estimated to reach $2.4 billion, by 2028. The revenues of domestic MRO service providers in India are expected to triple. Union Budget 2024-2025 incentivized MRO activities in aviation and implemented a uniform 5% IGST on aircraft parts.
Government Policies and Initiatives
Union Budget 2024-2025 allocated $282 million to the Ministry of Civil Aviation. The Public-Private Partnership (PPP) modalities by the Ministry of Civil Aviation, will privatize 25 airports under the National Monetization Pipeline.
Increasing Investments
The Indian aviation sector is expected to witness investments worth $25 billion by 2027. FDI inflow in India’s air transport sector (including air freight) reached $3.6 billion from April 2000 to March 2024.
