India’s Airline Industry Set for Unprecedented Growth: Report

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India’s airline industry is on the brink of explosive growth, driven by a surge in travel demand and a rapidly expanding population.

Massive aircraft orders from leading carriers signal a major shift in the global aviation landscape, with India poised to become a dominant player, according to a recent report by Netherlands-based ING Bank NV.

Structural Growth Potential

The ING Bank report underscores India’s potential for substantial structural growth. It highlights that airlines such as IndiGo and Air India have placed historically large orders for new aircraft to meet the anticipated increase in demand.

“India’s eagerness to travel, combined with its growing population, positions it as a significant force for future airline growth,” the report states.

Global Aviation Outlook

The report also examines the future of the global aviation sector, noting that long-term growth projections over the next 20 years have been revised downward to an annual range of 3-4 %, from the previous 5-6 %, particularly in the post-pandemic era.

Europe is expected to experience the lowest growth rates due to rising emission costs, which are likely to make flying more expensive. Domestic travel within large countries has been the first to recover, with traffic levels already reaching pre-pandemic figures last year.

The report notes regional differences, pointing out that the US and China started 2024 with traffic levels surpassing pre-pandemic numbers.

India Aviation Market Analysis

The India Aviation Market is projected to expand significantly, with its market size estimated to grow from USD 13.89 billion in 2024 to USD 26.08 billion by 2030, reflecting a compound annual growth rate (CAGR) of 11.08% during the forecast period, according to Mordor Intelligence.

In 2024, India’s airline capacity is expected to reach 230 million departing seats, nearly double the levels seen in 2014, indicating a robust post-pandemic recovery.

Historically, domestic airline capacity in India has grown faster than international capacity, with an average annual growth rate of 8.7% from 2005 to 2024, compared to 6% for international capacity. This trend is partly due to regulations requiring foreign carriers to operate domestically before launching international services, according to an OAG report.

Despite significant aircraft orders, India’s air capacity remains underutilized, being just one-fifth of that in the United States and nearly four times smaller than China’s. Even with the new orders, India’s fleet will total just over 3,000 aircraft, while China’s fleet already exceeds 4,000 and continues to grow.

Increasing Aircraft Demand

Akasa Air has placed a firm order for 150 Boeing 737 Max planes, including the 737 Max 10 and 737 Max 8-200 models. In 2023, domestic air traffic in India surged, leading Air India and IndiGo to place substantial orders for a total of 970 planes with Boeing and Airbus.

Tata Group-owned Air India ordered 470 planes—250 from Airbus and 220 from Boeing—in February. In June, IndiGo, the country’s largest airline, announced an order for 500 narrow-body planes from Airbus. Together, Akasa Air, Air India, and IndiGo have placed orders for 1,120 planes since February last year.

The report highlights that over the past year, Air India and IndiGo have announced plans to purchase up to 170 wide-body planes. Including narrow-body aircraft orders from Air India, IndiGo, and Akasa Air, the total order book exceeds 1,200 planes in just over 14 months since February 2023.

Travel and Economic Growth

According to the report dated May 16, a mere 10 % of the global population, primarily those in upper-middle and higher income groups, accounts for nearly 90 % of passenger traffic.

The report also underscores a strong correlation between airline travel, GDP, and household income, particularly in Asia, where the propensity for travel is increasing.

With its burgeoning population and rising demand for travel, India is set to become a significant force in the global airline industry.