India Climbs to 3rd-Largest Aviation Market Globally

India’s aviation industry is flying high with historic growth and global recognition. According to the International Air Transport Association (IATA), India is now the 3rd-largest aviation market in the world in terms of passenger traffic, A major milestone for the country’s travel and transportation sector.

India’s Aviation Growth Surpasses Pre-Pandemic Levels

India has officially surpassed its pre-COVID aviation performance, driven by a rise in both domestic and international travel. “It (India) is now the third largest aviation market in the world in terms of passenger traffic, which includes both India's domestic as well as international traffic. It is also the sixth largest market for air cargo, and overall, a very exciting aviation market like I mentioned, which is on account of the emergence of stronger airlines which are growing its connections both within and outside of India,” said Amitabh Khosla, Country Director, India, IATA, at the IATA AGM 2025 in Delhi.

As per IATA’s report, by December 2024, international traffic was almost 20% above 2019 levels, while domestic traffic grew more than 8%. This strong recovery reflects India's growing demand for air travel and gives the sector a solid base for future growth.

Regulatory Framework Must Support Profitability

Despite the promising figures, IATA warns that airline profitability remains uncertain. It stressed the need for a robust and clear regulatory environment to ensure that aviation growth benefits the broader economy and citizens alike.

“Airline profitability is not guaranteed, and the wider regulatory environment must support sustainable air transport growth within the country. In particular, conversations regarding infrastructure development, taxation, labour and skills challenges, and ensuring climate change and sustainability considerations are addressed, are all required to secure a positive future for the industry and, in turn, the country,” the report stated.

Cost and Taxation Issues Raise Concerns

The IATA also highlighted concerns over India’s high-cost aviation ecosystem, particularly with regard to unpredictable taxation. “There are positions that are taken by the tax authorities in India, or frequent tax notices on untested and new issues,” said Khosla. He cited a past example involving GST on services between airline headquarters and their Indian branch offices, which was resolved in line with global norms.

However, new issues are surfacing. “In more recent months, end of 24 and beginning of 25 there is this other instance of notices being issued to some aircraft leasing companies where there is an expected cost impact which will have to be borne by the Indian carriers,” he added, calling for greater tax clarity and consistency.

Read More: India’s Domestic Aviation Growth Hits 11% as IndiGo, Akasa Air Gain Market Share.

Conclusion

India’s aviation sector has entered a phase of global significance, backed by impressive growth in passenger and cargo volumes. Yet, as IATA points out, the long-term health of the industry depends on how well the country manages its regulatory and fiscal environment in the coming years.

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