India's $170 Billion Aviation Challenge: Can the Industry Take Off by 2030?

India's Aviation Industry: Every other week, social media is flooded with posts from frustrated flyers in India, venting about flight delays, airline mismanagement, technical glitches or worse, physical rifts.

It's not a hidden fact that India's aviation sector is in desperate need of relief from its ongoing woes. But with the rising air traffic alongside rising cost and grounded fleets, the problems have only increased for both the sector and passengers.

According to a recent report by S&P Global, cited by Reuters, the sector will need over $170 billion in investment by 2030 to fund aircraft orders and an increase in airport capacity in response to the current surge in air traffic. As one of the world’s fastest-growing aviation markets, domestic passenger numbers are projected to double to 300 million by 2030, based on government data.
As for international flights, the figure could be even higher by the end of this decade, as per data collected from the Centre for Aviation.

"The timing is right to support higher borrowing. Rising passenger air traffic, relatively cheaper domestic financing rates, and conducive government policies on foreign ownership should boost funding prospects for the sector," S&P Global analysts said as per the report.

The global rating agency believes that Indian airlines will need to spend over $150 billion to finance their pending orders for 1,700 aircraft. Additionally, around $24 billion will be required to construct new airports and expand current ones.

The ongoing trouble story of India's aviation sector

The domestic aviation sector is experiencing a growing list of issues. From service delays and frequent cancellations to an increasingly dissatisfied customer base. On top of this, the count of grounded fleets has also been surging.

All this comes at a time when the country is witnessing a booming demand for air travel. However, it seems that the industry has clearly failed to take capitalise on the opportunity.

ICRA estimates that the Indian aviation industry could face a net loss ranging from Rs 20 billion to Rs 30 billion in FY25 and FY26. This marks a significant increase from the Rs 10 billion loss reported in FY24.