India’s aviation industry has been witnessing growth over the past few years. The total passenger traffic, after a drastic fall of around 66 per cent in 2020-21 due to the pandemic, saw a commendable recovery in 2023-24 by crossing the pre-pandemic levels of 2019-20. Several key initiatives have been taken to enhance air travel and improve the passenger experience. The number of operational airports in the country has more than doubled, from 74 in 2014 to 158 as of 2024.
However, there are some roadblocks that are impacting airport project implementation and airline operations. These include supply chain constraints, weather-related issues and infrastructure challenges. A look at the key obstacles to sector growth and some of the mitigation measures being attempted by stakeholders.
Land acquisition and environmental concerns
One of the key requirements for the construction of greenfield airports and the expansion of existing ones is the acquisition of additional land for developments. As per the Greenfield Airports Policy, 2008, a proposal for site clearance must be sent to the central government for developing a greenfield airport after carrying out the pre-feasibility study of the suitable site, followed by an in-principle approval. Apart from this, as per the National Civil Aviation Policy, 2016, the state government must provide land free of cost to the Airports Authority of India (AAI) for greenfield or brownfield airport projects. An airport development project necessitates large land parcels and involves acquisition processes. Over the years, issues related to land acquisition have resulted in roadblocks and delays for some projects. This necessitates appropriate compensation and, in some cases, resettlement of inhabitants.
In a recent development, runway expansion at the Thiruvananthapuram airport in Kerala is facing challenges due to land issues. The AAI requested a total of 22 acres for its development. However, there were delays due to approvals and revisions in alignments. Further, while processes for land acquisition for the upcoming Parandur greenfeld airport in Tamil Nadu are under way, there have been protests over its development. Meanwhile, airports have undertaken efforts to minimise disruptions caused by these issues. For example, compensations for the acquisition of land for Phases 3 and 4 of the upcoming Noida International Airport in Uttar Pradesh is reportedly around 40 per cent higher than that offered for Phase 2. The move is targeted to incentivise farmers and landowners to release their land and ensure the timely completion of land acquisition processes.
In areas of rich ecology, the process of acquiring land is further hindered by environmental concerns and the destruction of the natural ecosystem. The upcoming Puri Greenfield Airport is facing challenges in receiving approvals, with one of the main reasons being environmental concerns. In addition to the sensitive ecology of the coastal area, the airport is reportedly in close proximity to habitats of endangered and threatened species, including the nesting sites of the Olive Ridley turtles and the habitat of the Irrawaddy dolphins, raising significant concerns. The forest advisory committee has requested a detailed study to assess the number, presence and migration routes for at least one year.
The construction of airports and operations after completion are known to have negative impacts on the surrounding ecosystem. In efforts to combat this, airports are making use of sustainable materials for construction, adopting initiatives to reduce emissions from operations, implementing energy efficiency measures and using renewable energy to power airport functions.
ATF price impacts
A key factor that impacts airlines is the price of aviation turbine fuel (ATF). Based on the average price of benchmark international fuel and foreign exchange rate, ATF prices are revised on the first of every month, following cuts and rises. According to sources, ATF prices account for around 40-50 per cent of an airline’s operational costs. Given this high share in the expenses, any variations in prices are likely to impact their
financial position. In order to mitigate the effect of a price hike, airlines may sometimes levy fuel charges on passengers. Prices in Delhi were increased month on month by 3.3 per cent in November 2024 and again by around 1.5 per cent in December 2024. On a positive note, prices were reduced by around 1.5 per cent in January 2025.
Adverse weather conditions
Airline operators are also faced with external challenges such as weather-related issues, significantly affecting flight operations. Issues like fog reduce visibility, making it challenging for flights to carry out safe take-off and landing operations. For example, during the winter season, airports in Delhi and Kolkata face numerous flight delays and cancellations due to fog and reduced visibility. These conditions notably disrupt flight schedules, causing delays and cancellations, impacting both passenger convenience and airport operations.
The Ministry of Civil Aviation has undertaken various measures to reduce delays and enhance travel experience during such disruptions. These include communications on potential delays, implementation of new standard operating procedures for efficient wide area traffic management for air traffic regulation, and initiatives for passengers affected by delays.
While already operating at close-to-peak capacity, such delays cause crowding at terminals. Learning from experience, stakeholders have adopted various measures to mitigate the ill effects of fog-related issues. For instance, Delhi airport created a separate holding area for passengers impacted by flight delays or cancellations. The airport installed LED screens for real-time updates to passengers. “Follow-me” vehicles have also been deployed for apron and taxiway guidance for pilots.
In efforts to reduce the impact, various airports have adopted advanced landing systems. CAT III, an instrument landing system which aids aircraft in landing during low visibility conditions, as low as 50 metres, is one such technology. As of February 2024, India has a total of six airports that have CAT III-certified runways. These include airports in Delhi, Lucknow, Jaipur, Amritsar, Bengaluru and Kolkata. Airlines have also undertaken efforts in this regard. Air India has reportedly increased the number of pilots who are trained and certified for CAT III operations and low visibility landings.
Supply chain issues
Global supply chain issues have been looming in the industry over the past few years. Issues related to Pratt & Whitney (P&W) engines have resulted in the bulk recall of these engines globally. As a result, various aircraft globally were grounded. This issue also affected domestic carriers, requiring them to ground their aircraft as well. According to reports, around 25 per cent of the Indian fleet was grounded as of March 2024. The grounding of aircraft poses a significant burden on airlines in terms of elevated expenses. These include the lease rentals incurred on leased aircraft and the cost of grounding. Nevertheless, conditions are slowly improving. As of December 2024, of the 822 aircraft registered under the scheduled air transport service, the aircraft on the ground stood at 105, which translates to around 12 per cent of the fleet. IndiGo expects that the number of aircraft grounded due to the P&W issues will decrease to around 50 aircraft by March 2025, from over 70 aircraft. Efforts are also being made by the government to create a conducive environment for developing a domestic ecosystem for aircraft manufacturing, aiming to reduce external dependence.
Other challenges
Over the past year, airports and airlines have been impacted by hoax threat incidents. These incidents lead to delays, diversions and additional security checks, which impact overall airport operations. Between August 2022 and November 14, 2024, 1,148 hoax bomb threat incidents were reported. Of this, 2024 alone witnessed almost 1,000 hoax bomb threat incidents up to November 14, 2024, with October 2024 witnessing over 650 incidents. In this regard, the Bureau of Civil Aviation Security has stepped up to implement measures, including issuing guidelines for assessing threats and protocols for handling threats.
Future outlook
According to industry estimates, India’s civil aviation industry is expected to report a net loss of Rs 20 billion-Rs 30 billion in both 2024-25 and 2025-26. Passenger traffic during the first half of FY 2024-25 was impacted by weather-related issues. Therefore, the current year is expected to witness lower passenger traffic growth compared to FY2023-24. The anticipated losses for the two years are due to various factors, including supply chain challenges and engine issues. ATF prices have been high in comparison to pre-Covid levels. Interest burdens are also anticipated due to the increased lease liabilities.
In sum
While the aviation sector has made significant progress, it is facing some headwinds. On the infrastructure front, land acquisition issues have led to project delays and terminal congestions have impacted the passenger experience. On the airlines’ side, external issues such as adverse weather conditions and fog-related issues have caused delays and cancellations, impacting the operational schedules of airlines. Further, supply chain issues have impacted the fleet available for operations and are likely to affect future aircraft fleet delivery. While these challenges are a cause of concern, stakeholders are taking steps to overcome them. With this, the aviation sector can look forward to smoother times ahead.