In Numbers: How India Is Emerging As The World’s Fastest-Growing Air Passenger Market

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.

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.

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.

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.

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.

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.

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.

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 of this development will be funded by the Indian government, but there is also a growing amount of private investment taking place.