The Indian airline industry has undergone significant shifts in recent years. Rising income levels, changing customer preferences, increasing urbanisation and government initiatives such as the Regional Connectivity Scheme-Ude Desh ka Aam Naagrik (RCS-UDAN) have fuelled demand for air travel and enhanced regional connectivity in India. With this trend expected to continue, airlines are leveraging this opportunity by placing mega orders for aircraft. The market structure has also changed, with the entry of new carriers such as Akasa Air and Fly91 and the exit of players such as Jet Airways and GoFirst. Moreover, the merger of Air India and Vistara has marked a significant development in the sector.
Market share
Over the years, evolving market dynamics have led to a significant change in the market share of airlines, with IndiGo emerging as the dominant player in the domestic market, with a substantial growth throughout.
As of January 2025, the airline held a market share of more than 65 per cent in scheduled domestic passenger traffic, up from around 48 per cent in January 2020. Following IndiGo is the Air India Group, comprising recently merged carriers, which accounted for over 25 per cent of the market share in January 2025. Together, IndiGo and the Air India Group hold a lion’s share of more than 90 per cent in domestic traffic. The dominance of these two airlines has raised concerns within the industry. As a result, the government is encouraging new players to enter the market. Apart from this, some players have witnessed a declining trend over the years. SpiceJet, for instance, held a market share of 3.2 per cent in January 2025, a sharp drop from 16.6 per cent held in January 2020.
New entrants
While the current Indian airline market is dominated by two major players, new airlines are also making an entry into the segment. One of the newest carriers in the sector, Akasa Air has already captured a market share of 4.7 per cent in terms of passenger traffic for scheduled domestic operations as of January 2025, just over two years after commencing commercial operations in August 2022. The airline also achieved a milestone by launching international operations within 19 months of its inception.
Additionally, regional carrier Fly91 commenced operations in March 2024, aiming to enhance connectivity from Tier 2 and Tier 3 towns in the country. The airline currently connects around nine domestic destinations with a target to connect 50 cities in the next four to five years.
Apart from this, the sector is likely to see the operationalisation of a few new airlines in the coming years. Air Kerala, operating under Zettfly Aviation Private Limited, and reportedly India’s first ultra-low-cost-carrier received the no-objection certificate from the Ministry of Civil Aviation (MoCA) in July 2024. It is expected to launch operations by mid-2025.
Further, alhind Air is preparing to enter the market as a regional commuter airline, and has also received a no-objection certificate. Apart from this, a full-service airline, Shankh Air, is set to be launched in Uttar Pradesh, following approval from MoCA in September 2024.
While the entry of new airlines indicates a promising future, the sector also witnessed the exit of several players due to operational and financial issues. Jet Airways stopped operations in 2019, and was undergoing insolvency processes before the Supreme Court ordered its liquidation in November 2024.
More recently, the National Company Law Tribunal ordered for the liquidation of Go First in January 2025, following a request from its committee of creditors. The airline halted operations in May 2023 due to challenges, including the grounding of its fleet.
Air India mergers
The Tata Group acquired Air India in January 2022, taking over the management and control of the airline. Following this, the group completed the merger of Air India Express Limited and AIX Connect Private Limited (erstwhile AirAsia India) in October 2024, and the merger of Air India and Vistara in November 2024. These were among the most noteworthy developments in the Indian aviation sector in 2024.
Following the merger, Air India Express has been operating as a low-cost carrier, while Air India has emerged as the country’s largest full cost carrier. Air India stands to benefit from an enhanced fleet size, route network and in-flight experience, with an overall competitive edge. The combined Air India Group now has a fleet of over 300 aircraft. While some of Air India’s fleet has dated products, the ongoing $400 million refit programme is expected to change the scenario.
Growing aircraft fleet
Indian airlines have witnessed a significant increase in fleet size, nearly doubling from around 400 aircraft in 2014 to over 800 aircraft as of 2024. In addition, airlines have placed large orders for aircraft in recent years. Some of the key mega orders are Air India’s order for a total of 470 aircraft and IndiGo’s order for 500 aircraft in June 2023. Akasa Air also placed an order for 150 aircraft from Boeing in January 2024.
While narrow-body aircraft dominate the aircraft fleet, emerging trends indicate airlines inducting and placing orders for wide-body aircraft, aiming to expand their reach. These aircraft not only facilitate long-haul international operations, but also have a larger passenger capacity and offer cost advantages for domestic and regional operations.
In December 2024, Air India placed an order for 100 aircraft from Airbus, comprising 10 wide-body aircraft and 90 narrow-body aircraft.
In April 2024, IndiGo placed an order for 30 wide-body aircraft. Apart from this, IndiGo signed an agreement with Norse Atlantic Airways for the damp lease of four Boeing 787-9 aircraft over the past few months, which are likely to be operated on long-haul routes. With the induction of these four aircraft, IndiGo’s total fleet of wide-body aircraft will stand at six, comprising four B787 aircraft and two B777 aircraft.
Other trends shaping airline operations
Airlines are increasingly collaborating with foreign carriers to expand operations through code share agreements.
Air India recently entered into code share partnerships with the Lufthansa Group, Virgin Australia and Kenya Airways, among others, while IndiGo has partnered with Turkish Airlines, Qantas Airways, Japan Airlines, etc. Akasa Air has also entered into a code share partnership with Etihad Airways.
Technology is also playing a crucial role in improving operations and enhancing passenger experience. Airlines are adopting advanced technologies to streamline ticket booking processes, enhance customer support through AI chatbots and manage operations. In a recent development, Air India launched eZ Booking, an AI-driven feature that enables customers to communicate with an AI-agent for faster reservations. In March 2025, IndiGo partnered with Amadeus for implementing an advanced revenue management technology.
Airlines are also catering to emerging customer preferences for enhanced in-flight experiences through premium seats. Air India is looking to increase the number of premium economy and business class seats to leverage the possibility for revenue growth.
Further, low-cost carrier, IndiGo has introduced a tailor-made business product called IndiGoStretch offering enhanced experience and additional benefits for business travellers. By the end of the year, the service is expected to be available on 12 routes, with 45 aircraft equipped with the facility.
In sum
Recent trends in the Indian airline industry indicate a promising future. New aircraft orders, and increasing passenger traffic and demand are expected to drive the expansion of the aircraft fleet and support sector growth.
This growth is also set to benefit allied sectors. The demand for maintenance, repair and overhaul (MRO) services within the country is expected to rise in tandem with the fleet size. A significant portion of the current demand is met abroad, but government initiatives are promoting the development of domestic capabilities. Additionally, efforts are under way to promote the domestic manufacturing of aircraft.
Looking ahead, while challenges such as global supply chain disruptions could impact future aircraft deliveries, prevailing trends in the sector are expected to drive its continued growth.
