The Indian aviation sector has been riding on favourable tailwinds in recent years, marked by significant infrastructure developments and policy initiatives. Passenger traffic has been rising over the past decade, owing to supportive government policies, rising income levels, enhanced connectivity and efforts by airlines to meet the increasing demand. In 2024-25, airports across the country handled over 411 million passengers, recording a 9.4 per cent year-on-year growth as per data from the Airports Authority of India. Freight handling has also gone up, growing 10.5 per cent to over 3.7 million tonnes (mt) during the same period. With the commissioning of new airports, development of allied infrastructure, strengthened regulations and notable airline moves, the sector has witnessed an eventful year, paving the way for future growth.
Government impetus to growth
Government initiatives and policies have played a key role in driving equitable growth in the Indian aviation sector. The Regional Connectivity Scheme Ude Desh ka Aam Naagrik (RCS UDAN), launched in 2016 to make air travel convenient and affordable across the country, has enhanced air connectivity to various Tier II and Tier III cities. As of July 2025, the scheme has operationalised 637 routes connecting 92 unserved and underserved airports across the country, including 15 heliports and two water aerodromes. Further, over 15.4 million passengers have travelled on over 316,800 flights under the scheme. In addition, 10 more airports are expected to become operational in 2025-26. While the original scheme was envisioned for a 10-year period, the Union Budget 2025-26 announced plans to launch a modified UDAN scheme, aimed at connecting 120 new destinations and catering to 40 million passengers in the next 10 years.
Over the past year, several notable aviation legislations have been passed, aligning the domestic industry with international standards and conventions, promoting domestic manufacturing, easing aircraft leasing and attracting greater investments in the sector. These include the Bharatiya Vayuyan Adhiniyam 2024, which came into effect in January 2025, and the Protection of Interest in Aircraft Objects Bill, 2025.
Infrastructure expansion
Rising demand for air travel has created the need for resilient, sustainable and scalable aviation infrastructure across the country. Airports have evolved from being transit points to infrastructural marvels featuring the integration of modern and traditional architecture, while prioritising passenger experience. India currently has 162 airports (including heliports and water aerodromes) with a capacity to handle over 540 million passengers annually.
The past year has witnessed sizeable capacity additions, with the inauguration of new airports at Rewa, Ambikapur, Saharanpur, Amravati and Satna; new terminals at Jaipur, Patna and Tuticorin; and several expansion projects at existing airports. Moreover, cargo infrastructure has gained traction. India’s largest greenfield domestic cargo terminal was inaugurated in Bengaluru in February 2025.
Current trends indicate a forward-looking trajectory. With air travel increasingly shifting from a luxury to a preferred mode of travel, and Indian airports emerging as international transit hubs, passenger traffic is expected to increase further. The government also expects cargo volumes to touch 10 million metric tonnes by the end of the decade. In line with this, airports are set to expand both in number and scale, with foundation stones laid for new expansion projects and groundwork already under way for greenfield facilities.
Carrier dynamics and expansion
The airline segment has undergone a significant transformation, shaping both market dynamics and trends. The Tata Group made headlines with the merger of AIX Connect (formerly AirAsia India) and Air India Express to form a low-cost carrier in October 2024, and the merger of Vistara with Air India to form a full-service carrier in November 2024. With the merger, the Tata-owned Air India Group, which includes Air India and Air India Express, now holds a domestic market share of around 27 per cent in terms of passengers carried as of June 2025, ranking second only to domestic market leader IndiGo, which holds a dominant 64.4 per cent share. Together, these two airlines account for over 90 per cent of the domestic market.
Fleet expansions have also shaped the airline segment in the past year. Notable orders include Air India’s order for 100 aircraft in December 2024, and IndiGo’s decision to convert purchasing rights for 30 aircraft into a firm order, which have taken the total number of aircraft ordered by Indian airlines over the past decade to more than 2,000.
While these established players dominate the market, new airlines have also gained traction. Akasa Air has captured a 5 per cent share in the domestic market within just three years of operation. Meanwhile, new airlines such as Air Kerala, Alhind Air and Shankh Air have received no-objection certificates, and are set to commence commercial operations soon. The coming few years are expected to reshape market dynamics while strengthening regional connectivity.
Moving towards smarter and sustainable operations
The adoption of smart technologies to manage airport and airside operations, alongside efforts to reduce emissions and negative environmental impacts, has become a key focus area. In line with India’s net zero targets, airports are adopting renewable energy, electric vehicles, energy efficient utilities, and water and waste management practices, among other initiatives. Currently, around 88 airports in the country operate on 100 per cent renewable energy.
In line with global trends, India is witnessing the adoption of sustainable aviation fuels (SAFs). Blending targets have been set, initially for international flights. While still at a nascent stage, the SAF segment has witnessed notable developments in the past year. Honeywell and AM Green have signed an MoU, which involves assessing the feasibility of SAF production from various sources. Hindustan Petroleum Corporation Limited and Boeing entered into a partnership in February 2025 to advance the country’s SAF ecosystem. Further, NTPC Green Energy Limited (NGEL) and Honeywell UOP India Private Limited have signed an MoU to explore the production of SAF. As per industry reports, India has the capacity to produce 8-10 mt of SAF by 2040.
Airports have also stepped up in the adoption of smart technologies, aiming to streamline operations and enhance monitoring and security. Key initiatives include the launch of Unified Total Airside Management at Delhi airport in March 2025 and an AI-powered digital twin platform and Airport Predictive Operation Centre (APCO) at Hyderabad airport. Cochin airport also launched CIAL 2.0, its Rs 2 billion digitalisation programme.
Emerging areas of opportunity
MRO and domestic manufacturing
The growing aircraft fleet and the expected induction of additional aircraft are creating demand for maintenance, repair and overhaul (MRO) services. As of June 2025, India has 154 MRO facilities. In March 2025, Thales inaugurated its new MRO facility in Gurugram. Further, Air India and IndiGo are constructing MRO facilities at Bengaluru airport. New facilities are also expected to come up in Bhopal, Hyderabad and Bhubaneswar.
Backed by favourable policies and demand, the segment has been labelled a sunrise sector, with the government targeting to transform the country to a $4 billion MRO hub by 2031. India is also taking initiatives to promote domestic and indigenous manufacturing in the aviation segment. Major companies such as Boeing, Airbus and GE Aerospace are set to ramp up their sourcing from India.
Urban mobility
India has taken initial steps towards the adoption of advanced air mobility solutions, aiming to tackle urban congestion and enhance connectivity to geographically challenged areas. These include electric vertical take-off and landing (eVTOL) aircraft, helicopters and seaplanes.
The government has stepped up on the regulatory front, with the launch of guidelines for seaplane operations in August 2024 and guidance material for vertiports and airworthiness criteria for the type certification of eVTOLs in September 2024. Moreover, players such as the ePlane Company and Sarla Aviation are developing eVTOLs and air taxis.
In sum
India is currently among the top aviation markets globally. Ongoing initiatives in the sector are transforming operations while also paving the way for future growth and expansions. The country is expected to add 50 new airports in the next five years, and the total count is targeted to reach around 350 by 2047. While the sector has witnessed significant developments over the past year, geopolitical events and unfortunate incidents in recent months have increased the focus on safety in airline operations and airports. This has led to stricter checks and regulatory compliance. Continued investments in safety, advanced technologies and monitoring are also expected.
Meanwhile, efforts are under way to tackle other challenges such as supply chain issues, weather-related issues and external challenges. Looking ahead, the sector is poised for strong growth, with the potential to contribute to the country’s overall development.
Shreya Annie Mathew
