Modi's soaring Indian aviation ambitions face many headwinds
Challenges include plane shortages, infrastructure, regulation
NEW DELHI: Prime Minister Narendra Modi's high-profile attendance at a global airlines conference this week underscores how much India is banking on a boom in aviation to support wider development goals, but headwinds to its ambitions are gathering force. Undeterred by the uncertainty gripping the aviation sector globally due to trade tensions and shaky consumer confidence, India's biggest airlines are ploughing ahead with orders for new planes, following record deals two years ago.
However, the rapid pace of growth risks losing steam if plane shortages, infrastructure challenges and taxation issues are not addressed, industry officials warned at the International Air Transport Association's annual meeting. Hostilities with neighbor Pakistan are also causing Indian airlines to take large, expensive detours around Pakistani airspace, requiring more fuel and passenger care. Carriers have asked the Indian government to waive some fees and provide tax exemptions, people familiar with the matter have told Reuters, but it is not clear if it will provide any help, despite its high-flying rhetoric.
New Delhi says it wants India to be a job-creating global aviation hub along the lines of Dubai, which currently handles much of India's international traffic. 'In the coming years, the aviation sector is expected to be at the center of massive transformation and innovation, and India is ready to embrace these possibilities,' Modi told global aviation leaders on Monday. But the transformation will require billions of dollars of investment in airports and industry supply chains, and a revamp of regulations, industry officials said.
Punching below its weight
The numbers look promising. IATA forecasts passenger traffic in India will triple over the next 20 years and the country has set a target of increasing the number of airports to as many as 400 by 2047, up from 157 in 2024. 'We are fast emerging as a strategic connector country ... India is a natural connector of the skies and aviation as well,' India's Civil Aviation minister Ram Mohan Naidu told global airline CEOs in New Delhi.
Already the world's third-largest aviation market by seats after the US and China, there is significant potential for India to grow. The world's most populous nation, India accounts for around 17.8 percent of people but only 4.2 percent of global air passengers, according to IATA. A record 174 million Indian domestic and international passengers flew in 2024, compared to 730 million in China, IATA data shows.
'The outlook is potentially a very positive one for both the Indian economy and air transport industry. However, such outcomes are not guaranteed,' IATA said in a report on the Indian market. Industry executives and analysts said more work lies ahead in scaling aviation-related infrastructure, updating rules, lowering taxes and making life easier for airlines. 'Even the regulators will agree that they need to update their regulation, because there is a reason why India is not punching above its weight. In fact, it is punching very much below its weight,' Association of Asia Pacific Airlines Director General Subhas Menon said.
Dubai-based Emirates, for example, says capacity restrictions on foreign airlines need to be relaxed for the industry to reach its full growth potential. 'For every seat we offer, particularly in the peaks, we've got three to 10 people trying to get it,' Emirates President Tim Clark told reporters. Among other problems, India lacks enough domestic maintenance, repair and overhaul facilities to care for its fleet, making it overly dependent on foreign shops at a time of stiff competition for repair slots, particularly for engines. Global airlines have aircraft sitting on the ground because there aren't enough facilities available for servicing them, IATA Director General Willie Walsh said.
'I think airframe maintenance is a huge opportunity for India because you require labor and you require skills. And that's something that I know India is investing in,' Walsh said, in response to a Reuters question at a press conference. Airline growth globally is being tempered by extended delays to deliveries of new, more fuel-efficient planes due to supply chain issues. India's largest airline IndiGo has been leasing aircraft to allow it to expand internationally while it waits for new planes. This week it partnered with Air France-KLM, Virgin Atlantic and Delta to extend the reach of IndiGo tickets using those airlines' networks. — Reuters
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