The recent Paris Air Show buzzed with excitement as Airbus sealed a groundbreaking deal, announcing an order for 500 narrow body jets from IndiGo, India’s very own budget carrier. The air industry was thriving as Air India Ltd also embarked on a mission to acquire 540 aircraft from Boeing and Airbus. These extraordinary agreements come as no surprise, considering that India ranks third in the world for domestic air traffic, showcasing the nation’s emergence as a global aviation powerhouse. The surge in air travel is propelled by an aspirational middle class, fuelling the demand for flights across the country.
With projections of over 140 million passengers in FY2024 and an estimated 1.3 billion passengers annually within the next two decades, India’s domestic market continues to grow at an unprecedented pace. In fact, in a single month, domestic carriers transported over 13 million passengers, solidifying India’s position as the third-largest domestic market globally.
As the industry thrives, the expansion of Maintenance, Repair, and Overhaul (MRO) facilities has become a priority. Positive signs emerged when the Goods and Services Tax (GST) rate for MRO services was reduced from 18% to 5% in 2022, easing the financial burden. Furthermore, the finance ministry’s expansion of the Emergency Credit Line Guarantee Scheme (ECLGS) alleviated liquidity stress caused by the pandemic, demonstrating the government’s support for the aviation sector.
Despite the overall optimism, Indian aviation has weathered its fair share of challenges. The recent crisis faced by GoFirst highlights the formidable obstacles airlines encounter, including operational expenses, fuel costs, and intense competition. However, amidst these challenges, new players like Akasa Air have taken flight. Backed by the late Rakesh Jhunjhunwala, the low-cost airline expanded its fleet by ordering additional Boeing 737-8 aircraft, signalling confidence in India’s aviation market.
