Context

• India has officially emerged as the world’s fifth largest aviation market, handling 241 million passengers in 2024, according to the latest World Air Transport Statistics (WATS) released by the International Air Transport Association (IATA).
• Among the busiest flight routes, Mumbai-Delhi ranked 7th globally, marking India’s growing dominance in global air travel.

Key Highlights of the Report

• India recorded 241 million air passengers in 2024, a 11.1% increase from 2023, when the figure stood at 211 million
• The US remains the world’s biggest aviation market with 876 million passengers in 2024, growing 5.2 percent year-on-year. 
• China was the second-biggest passenger market, with 741 million passengers, a growth of 18.7 per cent compared to 2023. 
• While the UK was at the 3rd spot with 261 million passengers, Spain stood at the 4th position with 241 million.
  • The figures include all international and domestic passengers departing or arriving in each country.
• Airport Pair Ranking:
  • Asia-Pacific dominated the busiest airport-pair rankings.
  • Jeju–Seoul (South Korea) was the busiest route globally with 13.2 million passengers.
  • Mumbai–Delhi ranked 7th globally with 5.9 million passengers.

Pillars of Avian Transformation

• Legislative Reforms for Systemic Change:
  • Protection of Interest in Aircraft Objects Bill, 2025 aligns India’s aircraft leasing system with the Cape Town Convention, reducing leasing costs and improving investor confidence.
  • Bharatiya Vayuyan Adhiniyam, 2024: Replaces the colonial-era Aircraft Act, 1934. It encourages Make in India, simplifies licensing, and aligns regulations with global standards like the Chicago Convention and ICAO norms.
• Infrastructure Expansion and Capacity Building:
  • Terminal Upgrades: Foundation laid for new terminals at Varanasi, Agra, Darbhanga, and Bagdogra.
  • Greenfield Airports: 12 operationalised since 2014 (e.g., Shirdi, Mopa, Shivamogga), with Navi Mumbai and Noida (Jewar) to be operational by early 2025–26.
  • CAPEX Investment: ₹91,000 crore allocated under National Infrastructure Pipeline (NIP); ₹82,600 crore spent by Nov 2024.

Government Initiatives

• UDAN Scheme: Enhances regional air connectivity by making air travel affordable for common citizens.
• National Civil Aviation Policy (NCAP): Promotes MRO, airport development, and aircraft leasing in India.
• Green Airports Policy: Encourages use of renewable energy, waste reduction, and carbon-neutral targets.
• Development of Noida International Airport and expansion of existing metro and non-metro airports.
• Aircraft Leasing and Financing Ecosystem: GIFT City is being promoted as a global aircraft leasing hub.

Challenges

Air Turbine Fuel

• ATF accounts for almost 45% of the operational cost of an Indian airline.
• ATF prices rose over 50% in 2022. As per Boeing, fuel costs for Indian airlines are 90% higher compared to their global peers. Additionally, ATF fuel is subjected to VAT which can range from anywhere between 15-30%, depending on the states’ taxation rules. The civil aviation ministry plans to bring down this tax to 1-4%.

Elevated Debt Level and Losses

• Due to a temporary halt in all airline operations at the peak of the pandemic and the subsequent rise in ATF pricing, the finances of Indian airline companies have been in disarray.
• Losses to the tune of Rs. 23,000 crores were recorded in 2021. Investment Information and Credit Rating Agency (ICRA) projects these losses to be in the range of Rs 15,000-17,000 crore this fiscal, despite the opening up of the economy.

Indian Aviation Policy

• Some Indian States impose provincial taxes of as much as 30% on jet fuel.
• Indian aviation policy has also posed barriers to entry and growth while also not affecting players uniformly.
• From 2004 to 2016, new airlines in the country had to be in operation for at least five years and have a fleet of at least 20 aircraft to be able to fly internationally, which stabilizes the operations and viability of carriers.

Way Forward

• Fuel Pricing Reform: Rationalise Aviation Turbine Fuel (ATF) taxes across states to make air travel cost-effective.
• Sustainability Focus: Encourage Sustainable Aviation Fuel (SAF), electric aircraft technology, and carbon offsetting mechanisms.
• Skilling and Training: Expand aviation skill development programs through institutions like the National Aviation University.
• International Hub Strategy: Develop select Indian airports into full-service international hubs competing with Dubai, Doha, and Singapore