Budget 2025 Gives New Wings To Aviation Industry

India’s aviation industry is flying high securing its spot as the world’s third-biggest aviation market. The aviation sector shows huge promise, with passenger numbers set to reach 480 million by 2036. Yet steep running costs and gaps in infrastructure still pose challenges. Budget 2025 could reshape India’s aviation scene, from upgrading airports to cutting fuel costs and boosting regional links, bringing perks to both passengers and investors.

Aviation has been highlighted as one of the most ambitious and upcoming sectors in India. Focus on aviation as a part of Viksit Bharat 2047, strengthens India's position as a global hub, ensuring greater mobility for all and contributing to a more connected, inclusive nation.

The latest Union Budget's emphasis on infrastructure development, regulatory improvements, and enhanced connectivity reflects the government's strategic vision for transforming India into a global leader in aviation, paving the way for economic growth and increased global competitiveness. This enhanced infrastructure is anticipated to propel India toward becoming a global aviation hub by 2030.

Envisaged in the Budget, a revamped UDAN scheme aims to boost regional connectivity by introducing 120 new destinations and strengthening India's journey to becoming a global aviation hub. UDAN is more than just a transportation initiative; it is about bringing aspirations and opportunities closer to people. Having already enabled 1.5 crore passengers to experience affordable air travel, the target is to extend this benefit to 4 crore more in the next decade.

So far, the scheme has operationalized 619 routes and connected 88 airports across the country. Building on this success, a revamped UDAN initiative will be launched to further enhance regional connectivity, adding 120 new destinations. Additionally, the scheme will focus on supporting helipads and smaller airports in remote, hilly, and aspirational districts, including the North Eastern region.

The number of air passengers annually has surpassed 350 million. Over the past ten years, domestic air passenger traffic has been growing at an annual rate of 10-12 per cent, and the number of airports has more than doubled to 159. If you look at the airfare trend, 16 per cent has increased in international airfare, whereas 43 per cent has increased in domestic airfare on average. The biggest revenue generator for all these airline companies is preferential seating, baggage fees, musical instrument carriage, sports equipment carriage, baggage carriage, lounge access, and meal and snack charges.

The government is committed to developing 50 more airports in the next 5 years. To cater to rising passenger demand in the eastern region, Greenfield airports will be facilitated in Bihar to meet the future needs of the State. These will be in addition to the expansion of the capacity of Patna airport and a brownfield airport at Bihta.

The Budget has underscored the government’s focus on upgrading air cargo infrastructure. India’s air cargo sector is growing at over 10 per cent annually, with airport cargo handling capacity reaching 8.0 million MT in FY24. There is a special focus on air cargo warehousing, particularly for perishables, opening up greater market opportunities for Indian producers and enhancing both exports and domestic trade efficiency. Streamlining cargo screening and customs protocols will enhance efficiency and promote ease of doing business in the sector.