VIVEK BHOLA
Aviation Industry
VIVEK BHOLA
Global aviation has remained strong over the FY25, driven by falling global inflation rates and
moderating ticket prices.
Industry total Revenue Passenger-Kilometer (RPK) grew 10.4% year-on-year in FY25. Asia
Pacific airline’s RPKs grew by 16.1% year-on-year followed by Africa that grew by 13.2% year-
on-year.
During FY25, freight traffic (International + Domestic) stood at 3.71 MMT. Between FY16 and
FY24, freight traffic increased at a CAGR of 2.80% from 2.70 MMT to 3.71 MMT.
Revenue Passenger Kilometers (RPKs) is a measure of the volume of passengers carried by an airline.
RPKs provide a comprehensive view of an airline's traffic performance
According to the International Air Transport Association
(IATA), passenger demand (RPKs) is expected to grow by 5.8%
year-on-year in CY 2025.
During FY25 International passenger demand grew 13.6%
year-on-year, Asia Pacific will be the fastest-growing region,
with a 9% YoY increase in RPK.
India is the 3rd largest aviation market in the world. In FY25
Domestic passenger traffic increased by approximately 8.7%
year-on-year.
India’s passenger traffic is expected to grow at a faster rate
than other economies in the world with a CAGR of 6.4% from
2023-43E, as per IATA.
VIVEK BHOLA
VIVEK BHOLA
Indian airport operators are projected to see an 18-20% YoY
growth in FY26, driven by sustained improvements in
passenger traffic, tariff hikes, and increased non-
aeronautical revenues, according to ratings agency ICRA.
The forecast of contribution of India's travel and tourism
sector to India's economy for the next ten years is Rs. 37
trillion.
The emergence of business hubs like Mumbai (Finance),
Bengaluru (IT), Chennai (IT), and Delhi (Manufacturing, IT)
is likely to boost business travel as well.
Leisure travel spending reached US$ 153.6 billion in 2021
and is expected to reach US$ 432.3 billion by 2028F,
whereas business travel revenue was US$ 6.3 billion in 2021
and is projected to increase to US$ 24.4 billion by 2028F.
Indian Aviation Industry Growth Drivers
Underpenetrated India’s Aviation market: The domestic market registered a strong growth of 25%
CAGR over FY 2022-FY 2025 and is expected to continue to grow driven by rise in disposable
income, Favourable demographics, Higher share of working class population.
Growing International travel: There has been a strong surge in international travel and citizens are
exploring more destinations than ever before.
Rising middle class and demographic advantage: India has one of the youngest populations in
the world, with over 65% of citizens under the age of 35 and a cultural shift towards experience-led
spending are pushing more Indians from Tier 2 and Tier 3 cities to choose air travel for work, leisure,
and education.
Expansion of infrastructure: The Indian government has been focused on building infrastructure to
boost the aviation sector. New brownfield and greenfield airports are planned to be developed to
strengthen air connectivity to underserved regions.
Aircraft financing: To reduce dependence on foreign lessors and strengthen domestic leasing
capabilities, the government has taken significant steps to develop a robust aircraft leasing and
financing ecosystem.
VIVEK BHOLA
GOVERNMENT INTIATIVES
The Indian government has approved 100% Foreign Direct Investment (FDI) via the
automatic route for the Maintenance, Repair, and Overhaul (MRO) sector. FDI inflows in
India’s air transport sector (including air freight) reached Rs. 37,074 crore between April
2000- December 2024.
UDAN scheme fosters regional connectivity with 519 operational routes, benefiting
133.86 lakh passengers. Over 2.56 lakh flights have operated, involving 13 airlines,
including startups, shaping a transformative impact on regional growth and air
connectivity.
NABH (NextGen Airports for Bharat) - Nirman is a government initiative to expand
airport capacity more than five times to handle billions of trips a year, in the next 10-15
years.
In 2023, the government has accorded 'In-Principle' approval for setting up 21
Greenfield Airports across the country. Out of these, 11 Greenfield airports have been
operationalised.
VIVEK BHOLA
FOLLOW
FOR MORE
SUCH
CONTENT
THANKS FOR READING
VIVEK BHOLA
