India soars to 3rd spot in global aviation market, says IATA

India Ranks Third in Global Aviation Market, Reports IATA

India has achieved remarkable growth in its aviation sector, now positioned as the third largest market globally in terms of passenger traffic, as highlighted by the International Air Transport Association (IATA). While the recovery in both international and domestic aviation traffic is strong, several critical challenges persist, particularly regarding rising costs and tax uncertainties.

ET Bureau Last Updated: Jun 01, 2025, 08:24:00 PM IST

Overview of India’s Aviation Progress

India’s aviation sector has surpassed pre-pandemic performance levels, now ranking as the third-largest global aviation market based on passenger traffic. Nonetheless, the IATA has identified rising costs and tax-related uncertainties as significant hurdles for the industry.

“India is now the third-largest aviation market in the world with respect to passenger traffic, inclusive of both domestic and international flights. It is also recognized as the sixth-largest market for air cargo, demonstrating a vibrant aviation landscape fueled by the growth of robust airlines that are expanding their networks both in India and abroad,” stated Amitabh Khosla, Country Director – India, IATA, at the IATA AGM 2025 in Delhi.

IATA’s report notes that by December 2024, the international air traffic sector has increased by nearly 20% compared to 2019, and the domestic traffic is more than 8% higher. This strong recovery underscores a solid demand in India for both domestic and international air travel, laying a strong foundation for future growth.

However, the report also warns that the optimistic outlook comes with its own set of challenges. Airline profitability is not guaranteed, and it is essential for aircraft operators, industry partners, and policymakers to work together to capitalize on this growth potential. Fostering a positive future for the aviation sector will require addressing infrastructure development, taxation, labor and skills challenges, and sustainability considerations.

Mr. Khosla further emphasized that discussions regarding the high cost environment for aviation in India, particularly concerning taxation, are crucial. The unpredictability surrounding tax planning has been a challenge for companies, particularly with various issues related to GST yet to be clarified. He noted a previous concern over GST on the import of services between airline headquarters and their Indian branch offices, which has recently been addressed positively by tax authorities. Nonetheless, new tax notices issued to aircraft leasing companies might impose additional costs that Indian carriers will need to absorb.