In this March 2025 edition of our newsletter, we bring you a concise analysis of the rapid growth in India's civil aviation sector, now the world's third-largest domestic market. As the industry evolves to improve connectivity, enhance operational efficiency, and embrace sustainability, we highlight key regulatory changes, major infrastructure approvals, and recent legal precedents that are shaping the future of aviation in India and globally.
We hope this issue offers valuable insights as we continue to track the latest developments and opportunities in this dynamic sector.
A. Key Updates – India
(a) CareEdge projects strong growth for Indian airport sector with growing passenger traffic
March 31, 2025 - CareEdge Ratings has released a comprehensive report on India's airport sector, projecting a 9% compound annual growth rate in passenger traffic from FY25 to FY27, with volumes expected to reach approximately 485 million by FY27. The sector has shown a strong post-pandemic recovery, with FY24 traffic reaching 1.10 times pre-COVID levels. While domestic traffic rebounded by FY23, international travel surpassed pre-pandemic levels by FY24 with the support of growing connectivity.
The report also highlights significant capital investment trends, reporting Rs 80,000 crore in capex from FY21 to 9MFY25, with an additional Rs 1.1 lakh crore planned for FY26-FY30, led by brownfield expansions. Aero revenue is projected to grow at 42% CAGR over FY24-FY27 due to tariff hikes and operationalisation of new capacities, while non-aero revenue is expected to grow at 12%-14% CAGR. Financial leverage for major private airports is expected to peak by FY25 and improve to below 6x from FY26 onward, driven by rising traffic volumes and improved profitability.
Source: CareEdge Ratings
(b) India pushes for aircraft leasing hub with 200 aircraft assets already leased from GIFT City
March 27, 2025 - In a significant step toward establishing India as an international aircraft leasing hub, Civil Aviation Minister Ram Mohan Naidu announced that Gujarat's GIFT City has already leased out 200 aircraft assets to various companies. Speaking in the Lok Sabha, the minister emphasized the government's commitment to fostering competition in the aviation sector, which he said could ultimately bring down airfares for passengers. He stated that India is now actively working to build a comparable ecosystem to established leasing hubs such as countries like Ireland, Singapore, and Dubai, through regulatory and policy support .
Mr. Naidu further stated that the government is focused on increasing airline fleets and lowering the cost of aircraft leasing within the country. A key part of this effort involves legislation to ratify the Cape Town Convention, a move that is expected to reduce leasing costs by 8-10%.
Source: Economic Times
(c) Parliamentary committee recommends AI Fare Monitoring, Carbon Exchange & Interior Standards in 375th Report
March 25, 2025- The Parliamentary Standing Committee on Transport, Tourism and Culture has made the following key recommendations in its 375th Report on Demands for Grants (2025–26) for the Ministry of Civil Aviation:
- AI-Powered Airfare Regulation
Recommends an AI system to monitor and flag fare deviations from predicted fair price ranges while ensuring proactive regulation.
- Citizen-Centric "Airfare Vigil" App
Proposes a mobile app enabling citizens to report arbitrary fare hikes with geo-tagging and automated complaint tracking.
- Aviation Carbon Exchange Program
Recommends setting up a carbon exchange for airlines to trade carbon credits, incentivizing green technology adoption.
- Aviation Interior Quality Standards
Proposes an Aviation Interior Quality Commission to enforce standards for seating, ergonomics and sustainability.
Source: Press Release, Parliament of India
(d) Thales opens new avionics Maintenance, Repair & Overhaul centre in Gurugram
March 21, 2025- Thales has opened a new Avionics MRO facility in Gurugram. The facility, which was certified by the Directorate General of Civil Aviation in December 2024, will provide maintenance and repair services to major Indian airlines, including Air India and IndiGo.
This move aligns with Thales's commitment to supporting India's growing aviation sector and strengthening its self-reliant aviation ecosystem. The new centre aims to enhance the local capabilities in avionics repair, improving service efficiency for Indian carriers.
Source: Thales Website
(e) India's domestic air passenger traffic sees 11.04% growth in February 2024
March 20, 2025 – According to monthly report released by DGCA India's domestic air passenger traffic grew by 11.04% in February 2024, reaching a total of 140.44 lakh passengers, compared to 126.48 lakh in the same month last year.
IndiGo continued to dominate the market with 89.40 lakh passengers, holding a 63.7% market share, followed by the Air India Group, which transported 38.30 lakh passengers, claiming a 27.3% market share. The Air India Group completed significant mergers last year, including the integration of AIX Connect with Air India Express in October and the merger of Vistara with Air India in November. Other carriers, SpiceJet and Akasa Air, saw traffic of 6.59 lakh and 4.54 lakh passengers, respectively with market shares of 3.2% and 4.7%, respectively.
Source: DGCA Website
(f) ICRA forecasts growth for Indian carriers on international routes
March 20, 2025- As per ICRA report, Indian carriers are expected to increase their share, driven by network expansion and the introduction of wide-body aircraft for long-haul flights. ICRA forecasts a 15-20% growth in international traffic for Indian carriers in FY2025 and FY2026, outpacing domestic traffic growth. This will be supported by factors like e-visa facilities and government initiatives to boost tourism. Despite foreign airlines holding a dominant share (55%-60%), Indian carriers are poised for growth, with low-cost carriers accounting for 72% of international traffic in 9M FY2025.
Source: ICRA Report
B. Key International Updates
(a) Qatar Airways Group Earns IEnvA Certification for Ground and Cargo Handling
March 2025 - Qatar Airways Group has become the first ground and cargo handler in the world to receive IEnvA ("IATA Environmental Assessment") certification. The recognition was granted following the certification of Qatar Aviation Services, further strengthening the Group's environmental performance credentials.
This achievement adds to Qatar Airways' history of sustainability milestones, including being the first airline globally to achieve IEnvA Stage 1 in 2003 and the first in the Middle East to complete Stage 2 for all services in 2017. The IEnvA program provides industry-specific guidance and independent assessment, helping aviation organizations structure, measure, and improve their environmental practices.
Source: IATA
(b) Global aviation sustainability outlook 2025 report
March 12, 2025 – Geneva – The World Economic Forum has released its Global Aviation Sustainability Outlook 2025, emphasizing the urgent need for international coordination to keep the aviation industry on course for net-zero emissions by 2050. With major global events such as the ICAO Assembly and COP30 on the horizon, the report captures cautious optimism among industry leaders. Over two-thirds of surveyed aviation executives believe momentum toward decarbonization will continue this year, despite significant challenges such as high sustainable aviation fuel costs, policy fragmentation and geopolitical uncertainty.
The report identifies SAF availability and affordability as the primary hurdles, even as global production doubled in 2024 and is expected to do so again in 2025. It calls for stronger policy alignment, robust carbon pricing mechanisms, transparent SAF traceability systems and greater investment in clean aviation technologies like hydrogen and battery-electric aircraft. To achieve ICAO's interim 2030 goal of a 5% reduction in jet fuel carbon intensity and the broader 2050 net-zero target, the report stresses the importance of equitable support for the Global South and a renewed commitment to collaborative action across borders.
Source: World Economic Forum, Global Aviation Sustainability Outlook 2025, White Paper March 2025
C. Significant developments
(a) Air India and Air New Zealand sign MoU to boost India-New Zealand
March 19, 2025 - Air India and Air New Zealand, both members of the Star Alliance, have signed a Memorandum of Understanding to strengthen air connectivity between India and New Zealand. The MoU includes a new codeshare agreement across 16 routes via Singapore and Australia, enhancing travel options between major Indian cities and key destinations in New Zealand.
Passengers will be able to fly from Delhi, Mumbai, Bengaluru and Chennai on Air India and connect via Sydney, Melbourne, or Singapore to Auckland, Christchurch, Wellington, and Queenstown on Air New Zealand. The two airlines also plan to explore launching direct India-New Zealand flights by 2028, subject to regulatory approvals and aircraft availability.
Source: Air India, Media Reports
(b) IndiGo to launch daily direct flights between Tiruchirappalli and Jaffna
March 7, 2025 - IndiGo has announced the launch of daily direct flights between Tiruchirappalli (Trichy) and Jaffna, starting March 30, 2025. This new international route aims to boost connectivity between South India and Northern Sri Lanka, supporting both tourism and business travel.
With this addition, IndiGo strengthens its Sri Lanka network to over 60 weekly flights from five Indian cities. The service is expected to enhance cultural ties and economic exchange between the regions, offering travellers greater accessibility and convenience.
Source: IndiGo Press Release
D. Key Judicial Precedents
(a) Delhi airport operator sues Indian Government Over Nearby Defence Airbase Flights
March 17, 2025 - The operator of Delhi's Indira Gandhi International Airport ("DIAL") has filed a lawsuit against the Indian government, claiming that the approval of commercial flights from the nearby Hindon Airbase violates aviation norms and poses serious financial risks. DIAL warned the Delhi High Court that the decision could render the capital's primary airport "economically and financially unviable".
DIAL alleged the government breached rules that prohibit a new airport within 150 km of an existing facility without proven passenger demand. The lawsuit cites reports of Air India Express beginning operations from Hindon, located just 30 km away. With Hindon now hosting over 120 weekly flights, DIAL also raised concerns over a conflict of interest, as the state-run Airports Authority of India, which operates Hindon, holds a stake and board seats in DIAL.
Source: Reuters
(b) Delhi High Court declares additional IGST levy on repaired aircraft parts unconstitutional
March 5, 2025- In a significant ruling for the aviation industry, the Delhi High Court has declared the imposition of an additional Integrated Goods and Services Tax ("IGST") and cess under Section 3(7) of the Customs Tariff Act on the re-import of repaired aircraft parts unconstitutional. Interglobe Aviation Ltd, the parent company of Indigo Airlines, had challenged a 2021 notification from the Central Board of Indirect Taxes & Customs, arguing that the re-importation of aircraft parts after repair abroad should be classified as a "supply of service," not an import of goods. The court ruled in favor of the airline, holding that once a transaction is deemed a service, it should not be subjected to further duties as goods under the CTA.
The division bench, consisting of Justice Yashwant Varma and Justice Ravinder Dudeja, emphasized that the imposition of additional duties was legally unsustainable. The court stated that once a transaction is classified as a service under IGST, recharacterizing it as the import of goods for additional taxation was impermissible. This decision sets aside the controversial CBIC notification and strengthens the legal framework surrounding the taxation of services in the aviation sector. The ruling marks a critical win for the aviation industry in its ongoing fight against excessive regulatory burdens.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
