India's Aviation Sector Soars to Third Globally, Fuels Job Growth
India's aviation industry has become the world's third-largest by passenger traffic, according to an IATA report. This rapid expansion signifies a major milestone for the nation's connectivity and economic development. The sector's growth has also been a significant job creator, contributing approximately 7.7 million jobs. This highlights the increasing global prominence and economic impact of Indian aviation.
Unpacked:
India's rapid air passenger traffic growth is driven by a rising middle class, increased air travel affordability, government infrastructure investments (including nearly 150 new airports), and robust aircraft orders from domestic airlines. The return to pre-pandemic demand and mergers like Air India and Vistara have also contributed to increased stability and capacity.
India is now the third-largest aviation market by passenger traffic, behind the United States and China. Its domestic air passenger traffic reached about 165.7 million in FY25, with the market valued at $14.47 billion in 2024 and projected to reach $40.81 billion by 2033. China and the US still lead in both traffic and market size.
The industry faces challenges including supply chain disruptions, technical issues with aircraft engines, shortages of pilots and cabin crew, high fuel prices, and increased borrowing costs. These factors have led to grounded aircraft, flight cancellations, and projected financial losses of Rs. 20-30 billion in FY2025 and FY2026 despite strong passenger growth.
India's air passenger traffic is expected to grow at around 7% annually in 2025, supported by increased demand and ongoing infrastructure expansion. Long-term forecasts suggest a compound annual growth rate (CAGR) of 12.21% for the market through 2033, outpacing many global peers, though China currently leads in growth rate for 2025.