Why India Needs More Airlines to Grow?

India, a nation renowned for its diverse culture, rapid economic development, and burgeoning middle class, is at a critical juncture in its aviation journey. With one of the fastest-growing aviation markets globally, the country has seen a remarkable rise in passenger numbers and air traffic over the past decade. Yet, despite this growth, India’s aviation industry remains constrained by a lack of sufficient airlines to meet its vast potential.??

Adding more airlines is not only vital to keeping up with current demand but also essential to driving regional connectivity, enhancing global competitiveness, fostering economic growth, and unlocking the full potential of tourism and trade. In this article, we will explore why India needs more airlines to grow and what steps are required to achieve this transformation.??

India’s Aviation Sector: A Snapshot of Growth??

Over the last two decades, the Indian aviation industry has experienced exponential growth. According to the International Air Transport Association (IATA), India is poised to become the third-largest aviation market in the world by 2024. Domestic passenger traffic has grown steadily, with millions of first-time flyers taking to the skies as air travel becomes more accessible. The aviation sector has played a pivotal role in shaping India’s economy, contributing significantly to GDP and supporting millions of jobs.??

However, despite this growth, the country’s aviation market remains underserved. India, with its population of over 1.4 billion people and vast geographical expanse, has just a handful of major airlines, most of which are focused on a limited number of high-traffic routes. This lack of capacity and competition has created several challenges, including high airfares, limited connectivity to smaller cities, and dependence on a few dominant players.??

Why India Needs More Airlines???

1. Addressing Growing Passenger Demand??

India’s aviation sector is unable to keep up with the rapid rise in passenger demand. The increasing affordability of air travel, coupled with a growing middle class, has led to a surge in both domestic and international travel. According to the Directorate General of Civil Aviation (DGCA), domestic air traffic in India grew by over 47% in 2023 compared to the previous year, demonstrating the immense appetite for air travel.??

Yet, the limited number of airlines has led to overcrowded flights, higher ticket prices, and underserved routes. Many potential passengers are unable to afford air travel as airlines struggle to expand their capacity. By introducing more airlines into the market, competition would increase, driving down fares and making air travel accessible to a broader segment of the population.??

2. Enhancing Regional Connectivity??

India’s vast geography and diverse terrain make air travel the most efficient mode of transportation for many regions. While metropolitan cities like Delhi, Mumbai, Bengaluru, and Hyderabad are well-connected, smaller towns and cities often lack direct flights. This disparity in connectivity hampers economic development in less urbanised regions, limiting access to markets, education, healthcare, and job opportunities.??

The Indian government has launched initiatives like the UDAN (Ude Desh ka Aam Naagrik) scheme to improve regional connectivity, but the success of such programmes depends on the availability of airlines willing to operate on these routes. New airlines, particularly regional carriers, could play a crucial role in connecting underserved destinations, driving inclusive growth, and ensuring that the benefits of air travel reach every corner of the country.??

3. Reducing Over-dependence on a Few Players??

India’s aviation market is dominated by a handful of airlines, with Indigo alone accounting for more than 55% of the domestic market share as of 2023. While this dominance reflects the efficiency of established carriers, it also poses risks to the industry.??

The collapse of Jet Airways in 2019 highlighted the fragility of the Indian aviation sector. The exit of a major player disrupted the market, leading to reduced capacity, higher fares, and inconvenience for passengers. Over-reliance on a few airlines also limits consumer choice and can result in monopolistic practices.??

Encouraging the entry of new airlines would diversify the market, reduce risks, and foster healthy competition. A vibrant aviation ecosystem with a mix of legacy carriers, low-cost airlines, and regional operators would ensure greater stability and resilience.??

4. Boosting Tourism??

Tourism is a key driver of economic growth, contributing around 7% to India’s GDP and supporting millions of jobs across sectors such as hospitality, transport, and retail. However, the full potential of India’s tourism sector remains untapped due to limited air connectivity.??

Many of India’s most beautiful and culturally significant destinations, such as the Northeast, the Andaman and Nicobar Islands, and heritage towns like Hampi and Khajuraho, are difficult to access due to a lack of direct flights. This not only deters domestic tourists but also affects international travellers, who may choose alternative destinations with better connectivity.??

The entry of more airlines, particularly those focusing on low-cost and regional operations, can make these destinations more accessible. Improved air connectivity will attract foreign tourists, boost local economies, and enhance India’s global reputation as a travel destination.??

5. Economic Growth and Job Creation??

The aviation sector is a major contributor to economic growth, generating revenue, creating jobs, and driving innovation. According to IATA, India’s aviation industry supports over 7.5 million jobs and contributes $30 billion to the economy. Each new airline entering the market would create thousands of direct and indirect jobs, from pilots and cabin crew to ground staff, airport workers, and maintenance engineers.??

Moreover, increased competition among airlines would drive innovation, improve service quality, and reduce operational inefficiencies. This would not only benefit passengers but also strengthen the overall industry, making it more competitive on a global scale.??

6. Positioning India as a Global Aviation Hub??

India’s strategic location between Europe, the Middle East, and Southeast Asia gives it a unique advantage to become a global aviation hub. However, this potential remains largely untapped. Currently, many Indian passengers travelling to international destinations rely on foreign carriers or transit through hubs like Dubai, Singapore, and Doha.??

The development of more Indian airlines with international operations can reduce this dependence and capture a larger share of the global aviation market. A strong domestic aviation sector can also attract foreign investment, foster partnerships, and enhance India’s reputation as a global leader in aviation.??

Challenges to Overcome??

While the need for more airlines is clear, several challenges must be addressed to make this vision a reality:??

1. High Operating Costs??

Operating an airline in India is expensive, with high taxes on aviation turbine fuel (ATF), airport charges, and maintenance costs. These costs often discourage new entrants from entering the market or cause existing players to struggle financially.??

2. Infrastructure Constraints??

India has made significant investments in airport infrastructure, but many airports cannot still handle increased traffic. Congestion at major airports and inadequate facilities at smaller ones can hinder the growth of new airlines.??

3. Regulatory Hurdles??

The aviation sector in India is highly regulated, with complex processes for obtaining licenses, route permits, and approvals. Simplifying these regulations and providing incentives for new entrants can encourage more players to enter the market.??

4. Skilled Workforce Shortage??

The rapid growth of the aviation industry has created a demand-supply gap for skilled professionals such as pilots, engineers, and ground staff. Addressing this shortage through training and education initiatives is crucial for sustaining growth.??

The Way Forward??

To unlock the full potential of its aviation sector, India must adopt a multi-pronged approach:??

1. Encourage New Entrants: The government should provide incentives, such as tax breaks and subsidies, to encourage the entry of new airlines. Simplifying regulatory processes and reducing bureaucratic hurdles can further facilitate this.??

2. Focus on Regional Connectivity: Expanding the UDAN scheme and providing additional support to regional airlines can improve connectivity to smaller cities and towns.??

3. Invest in Infrastructure: Upgrading airport infrastructure, particularly in Tier-II and Tier-III cities, is essential to accommodate increased traffic and ensure a seamless travel experience.??

4. Reduce Operating Costs: Lowering taxes on aviation fuel and providing subsidies for maintenance and training can make the Indian market more attractive for new and existing players.??

5. Foster Innovation: Encouraging innovation, such as the use of sustainable aviation fuels and digital technologies, can enhance efficiency and reduce costs.??

6. Strengthen International Presence: Supporting Indian airlines in expanding their international operations can position India as a global aviation leader.??

Conclusion??

India’s aviation industry is at a turning point. The demand for air travel is growing rapidly, yet the sector is constrained by a lack of capacity and competition. To meet its growth aspirations and ensure inclusive development, India needs more airlines. Expanding the aviation industry will not only enhance connectivity and affordability but also drive economic growth, create jobs, and position the country as a global leader in aviation.??

By addressing the challenges and adopting a forward-looking approach, India can unlock the full potential of its aviation sector, ensuring that the skies are truly open for all.