Economy
India’s aviation sector flying high, 91% capex planned from FY20 to FY25 achieved: Economic Survey
Summary
- The survey also highlighted that to accommodate the growth in air traffic, Indian airlines have placed among the largest orders for aircraft globally.
India’s aviation market is flying high and is the fastest-growing globally, the Economic Survey 2024-25 said on Friday, highlighting that the country’s airlines have placed among the largest orders for aircraft globally to accommodate growth in air traffic.
There was a 6.12% increase in total domestic air passengers to 161.3 million in 2024 from 152 million in 2023, as per data by the Directorate General of Civil Aviation.
India's domestic flights recorded a passenger load factor of 86.4 per cent in 2024 to forge ahead of the US (84.1%) and China (83.2%), according to the latest report of the International Air Transport Association. Passenger load factor is a measure of capacity utilisation.
In terms of aircraft orders, IndiGo, the Air India Group and Akasa Air have over 1,500 pending deliveries from Airbus and Boeing. IndiGo, India’s largest carrier, has ordered over 900 Airbus aircraft, including 25 Airbus A350-900 widebody aircraft.
A mix of over 500 narrowbody and widebody aircraft from Airbus and Boeing are to be delivered to the Air India Group. Akasa Air, India’s youngest commercial airline, has ordered over 190 Boeing 737 MAX aircraft.
The survey noted that about 91% of the planned capital expenditure of over ₹91,000 crore for the period from FY20 to FY25 by airport operators, developers including the Airports Authority of India (AAI) was achieved by November 2024.
New airports
Among the new airports being developed, Noida International Airport near the national capital and Navi Mumbai International Airport near the financial capital are expected to improve India's aviation landscape.
Noida International Airport is expected to start operations in the new fiscal year, initially with a single runway and a single terminal. In the long term, the airport is expected to be the biggest in the country with six operational runways and the capacity to handle over 70 million passengers annually.
Navi Mumbai International Airport, which is being developed by the Adani Group, is expected to start operations in the new fiscal year and will have an annual capacity of 20 million passengers in the first phase.
The regional air connectivity scheme, Ude Desh ka Aam Naagrik (UDAN), registered growth of 13.58% in terms of operational routes in the period from March 2024 to December 2024. Operational routes increased from 545 to 619, and UDAN airports increased from 84 to 88, which includes two water aerodromes and 13 heliports.
The UDAN scheme was launched in October 2016 by Prime Minister Narendra Modi to bring air travel to people in underserved regions of India.
"The latest Economic Survey of India highlights the success of RCS-UDAN. This underscores the government’s commitment to improving regional connectivity and making air travel more affordable and accessible," Ashish Chhawchharia, partner - aviation industry at Grant Thornton Bharat, told Mint.
The government said in the Economic Survey that it was encouraging original equipment manufacturers to establish maintenance, repair, and overhaul (MRO) facilities in India. To lure more such companies, the GST Council implemented a uniform IGST rate of 5% on all aircraft and aircraft engine parts last year. Earlier, imports of aircraft components and aircraft engine parts attracted a GST rate of 18%.
The government's focus on MRO is set to increase as airlines in India usually send aircraft to other countries for MRO-related services.
"In fiscal year 2024, only 14% of the total MRO spends by Indian carriers were carried out by Indian MROs," Crisil Ratings said. “This is mainly because high value, heavy maintenance checks, eg. engine checks and component overhauls (every 20-24 months), are usually contracted with overseas MROs due to capacity constraints and higher turnaround times of Indian MROs."
Focus on drones
The survey said cargo handling capacity at Indian airports increased to 8 million metric tonnes in FY24, from 7.5 million tonnes in the previous financial year. The number of aircraft leasing entities registered at GIFT-IFSC in Gujarat increased to 32 from 28 as of 30 November 2024, the report said. During this period, 105 aviation assets, including 53 aircraft and 52 engines were leased, doubling from the previous year.
As per the Economic Survey, India had 26,659 registered drones and 40 remote pilot training organisations as of 31 October 2024. In addition, 18,862 remote pilot certificates were issued, and 82 drone models were approved. The government disbursed ₹60.6 crore under the production-linked incentive scheme to encourage local manufacture of drones.
“The drone sector’s growth, bolstered by ₹60.6 crore through the PLI scheme, and the establishment of domestic aviation financing via GIFT-IFSC, further demonstrate India’s strategic innovation," said Chhawchharia. “These advancements position UDAN as a model of success, paving the way for a promising future in the global drone and aviation markets."
