ANKIT SAXENA
Air India Aircraft (Representative Image)
India's domestic flight capacity has been fueled by the shift to low-cost carriers.
India is emerging as the world’s fastest-growing air passenger market and is now competing with the largest aviation markets — China and United States.
A recent analysis based on OAG data reveals that India's domestic airline capacity has surged twofold over a decade, growing to 15.5 million in April 2024 from 7.9 million in April 2014.
Adding to this, Civil Aviation Minister Jyotiraditya Scindia's in January stated, the country anticipates doubling this further within the next six years, reaching 300 million passengers by the end of 2030.
Consequently, India has ascended to the position of the world's third-largest domestic airline market, up from fifth place a decade ago.
The last decade for the domestic aviation capacity
The report, tracking a decade-long growth trajectory, provides insights into how India compares with other large domestic aviation markets such as the USA, China, Brazil, and Indonesia.
A decade ago, India had the smallest market among these, with 8 million seats, followed by Indonesia in fourth and Brazil in third place, with the USA and China occupying the top two positions.
Today, while the USA and China remain the largest domestic aviation markets, India has surpassed Brazil and Indonesia to become the third-largest domestic market, with a capacity of 15.6 million seats as of April 2024.
India's growth rate over the past decade averages the highest at 6.9 per cent annually, followed by China at 6.3 per cent and the US at 2.4 per cent.
(Source:OAG)
(Source:OAG)
Over the last two decades, domestic capacity in India has grown at an average annual rate of 8.7 per cent, while international capacity has grown at 6 per cent annually.
Major growth factors
Industry analysts observed a significant shift in the aviation sector starting from 2014, driven by reforms such as the removal of price caps, fostering competitive dynamics, and enhancing affordability in air travel options.
India's domestic flight capacity has been fueled by the shift to low-cost carriers (LCCs).
IndiGo, the country's largest homegrown airline, has led this shift, with its market share nearly doubling from 32 per cent to 62 per cent over the past decade.
Following closely, Air India stands as the second largest carrier in the domestic market, accounting for 28 per cent of the capacity. Together, these two airlines occupy 9 out of every 10 airline seats in India's domestic market.
(Source:OAG)
As per the data provided by the OAG report, in April 2024, LCCs accounted for 78.4 per cent of Indian domestic capacity.
Aligned with this are the government’s financial commitments, as long-term infrastructure upgrades are underway. AAI and other Airport Developers have planned a capital outlay of approximately Rs 98,000 crores for airport infrastructure over the next five years.
In the Union Budget of 2023-24, the Ministry of Civil Aviation received an allocation of Rs 3,224.67 crore, underscoring continued support on expanding the country's aviation infrastructure to meet growing demand and enhance connectivity nationwide.
The previous budget for 2022-23 earmarked Rs 601 crores for the RCS (Regional Connectivity Scheme) UDAN, aimed at promoting regional air connectivity across India.
With this growth, around 2,50,000 people were directly employed in India’s aviation and aeronautical manufacturing sector in 2023, according to data from the civil aviation ministry. This number is expected to grow to 3,50,000 by the end of this year.
Progress of ground infrastructure
With capacity in place, to cater to the increasing demand for air travel, it is of utmost importance to enhance the airport infrastructure capacity in the country.
The country's ten largest airports collectively handle more than two-thirds of its domestic capacity, with Delhi Airport accounting for 17 per cent of all domestic seats.
Meanwhile, since its launch in 2017, the Regional Connectivity Scheme (UDAN) has been progressively increasing accessibility to air travel and connecting smaller cities. The number of routes served in domestic market has increased from 215 in April 2014 to 540 in April 2024.
The government has set targets to operationalise 1,000 UDAN routes and to revive or develop 100 unserved and underserved airports.
Currently, India has 137 operational airports, managed by AAI including international, domestic, and custom airports.
There are plans for an investment of USD11 billion over the next five years to increase the number of airports in India to 200.
Some major airports that are inching closer to completion in the coming years. (Source: Swarajya)
Some of this development will be funded by the Indian government, but there is also a growing amount of private investment taking place.
The civil aviation sector has highlighted that India has implemented one of the most advanced airport privatisation programs globally, and the number of PPP (Public-Private Partnership) airports is expected to rise from five in 2014 to 24 by the end of this year.
https://swarajyamag.com/infrastructure/in-numbers-how-india-is-emerging-as-the-worlds-fastest-growing-air-passenger-market