Air India-Vistara merger, expansion, new players: Game-changing year for India’s Aviation sector

The year 2024, overall can be described as the year of challenges, recovery, survival to soaring. The year witnessed some of the major milestones that sent ripples of change across global aviation circles like the famous Air India – Vistara merger, Air India and IndiGo placing record aircraft orders, IndiGo turning 18 and branching out in Business-class zone and emergence of newer players in the market like Akasa Air and fly91. 

But the complete picture was not as rosy as it looks, India lost two of its full-service carriers – Jet Airways and Go First, supply chain woes grappled the airlines who faced their worse fears with delayed maintenance due to lack of spares and delays in new aircraft deliveries, the industry witnessed a minor glitch due to hoax bomb threats towards the fag end of the year, revised flight duty norms leading to discontent among pilots etc. But overall, the sector saw more positives than negatives. Let’s dive deeper.

In a landmark development on November 12, Air India merged with Vistara to create an integrated airline, partly owned by Singapore Airlines, flying over 1,20,000 passengers daily and connecting to over 90 destinations. The much-awaited and the unlikeliest of the mergers in aviation history was carried out smoothly and swiftly by the airline management within just six weeks of integration of Air India Express and AIX Connect. These two mergers created a full-service carrier and a low-cost carrier for the Tata’s who plan to bring back former glory days of Air India.

Branching out further into fleet expansion, Air India placed another order of 100 Airbus aircraft with 10 widebody A350s and 90 narrowbody A320s in addition to the record-breaking 470 aircraft order. The airline has even started retrofit program of its narrowbody and legacy aircraft with an aim to provide an enriched passenger experience. 

Just as the Air India story unfolded, IndiGo was not to be left behind. Just as the airline completed 18 years of service, IndiGo, known for its low-cost economy model, branched out into business class space and launched IndiGoStretch on high demand routes like Mumbai-Delhi and Delhi-Bengaluru. The airline plans to expand these routes further eyeing demand. In terms of aircraft orders too, IndiGo is not far-behind Air India. While the carrier is expected to take its first A321 XLR next year, it is already expanding its international connectivity with new routes and codeshare partnerships. In April, IndiGo signed a deal to purchase 30 Airbus A350-900s, with the option to buy up to 70 more. The order is worth US$5 billion and will allow IndiGo to expand its international network and operate wide-body aircraft for the first time. Deliveries are expected to begin in 2027.

The airline now has a total outstanding aircraft order of over 1,000.

This has led to a duopoly situation in the Indian market with Air India and IndiGo ruling the roost. Post merger Air India holds 28% market share while IndiGo has a 60-62% market share. Both combined own 90% of the Indian market making a duopoly situation. However, experts feel that even though this is good for the airlines, it might not be good for the passengers leaving them with little choice between just the two carriers. 

The entry of Akasa Air has brought a fresh wind into the sector, armed with CEO Vinay Dubey, the airline plans to stay long-haul. The airline, which started its operations in August 2022, currently operates 26 Boeing 737 MAX aircraft and has placed orders for 200 more planes. Interestingly the airline is in touch with Boeing for more aircraft orders in 2025. Not paying heed to the duopoly in the market, Akasa plans to prioritize offering superior customer service and promoting a culture of kindness and empathy among its staff. The airline currently holds 4.5% market share. 

From airlines let’s move to different remarkable policy changes across 2024 that will help aviation stakeholders for years to come. One of the major policy changes was Bhartiya Vayuyan Vidheyak 2024, replacing the nearly nine-decade-old Aircraft Act of 1934 heralding a new era in Indian civil aviation, bringing sweeping changes to align the industry with modern global standards and domestic aspirations. By addressing technological advancements, consumer rights, and infrastructure development, the Act demonstrates India’s ambition to establish itself as a global leader in aviation.

Apart from this, the MoCA also made some major moves in aircraft maintenance regulations like reduction in tax from 5%, 12%, 18%, and 28% to a uniform 5% rate thus simplifying the tax structure, transparency and certainty in land allotments for MROs at AAI airports, 100% foreign direct investment for MRO services via the automatic route, exemption of customs duty on tools and tool kits and much more that will help independent MROs in the country to enhance their capabilities. 
Coming to airports, Government has announced a comprehensive five-year plan to develop and expand more than 50 airports across smaller cities, to bolster the airport infrastructure through various projects set to be undertaken by the central government, state authorities, and private players up to 2030. Two major Metro airports are set to commence operations in 2025 easing the traffic on metro airports of Delhi and Mumbai. 

Although Indian aviation sector saw some of the above achievements, airlines like Go First and Jet Airways took to dust, never to fly again. Supply chain woes continue to grapple the aviation industry with delayed aircraft deliveries forcing airlines to wet-lease aircraft to meet demands. 

India’s air travel industry is also grappling with significant pilot fatigue issues. Recent incidents, including the tragic deaths of pilots on duty, have highlighted the severe consequences of overworked flight crews. Despite the Directorate General of Civil Aviation proposing new regulations to address pilot fatigue—such as extended rest periods and mandatory fatigue reports — implementation has been delayed due to resistance from airlines concerned about increased operational costs and staffing needs. The industry continues to face pilot shortage. Apart from these, the industry has been plagued by weak regulatory oversight, grounded aircraft coupled with service delays and frequent cancellations. 

To top it the aviation sector also faces infrastructural issues amply evident from the collapse of Delhi airport terminal roof raising concerns of quality and safety. 
The emergence of a duopoly in the domestic aviation market is another critical concern tilting towards higher fares and reduced competition, undermining the government’s vision of democratising air travel. 

The government is also pushing the sector to adopt sustainable practices, including carbon-neutral airports and the integration of solar energy for aligning the aviation sector with India’s broader climate goals.

India’s aviation sector holds immense potential, driven by rising demand, economic growth, higher disposable incomes, and greater penetration of aviation infrastructure. Initiatives like the Regional Connectivity Scheme (RCS-UDAN) aim to revive unserved and underserved airports, boosting connectivity and accessibility. With expanding economy, the aviation sector stands poised to play a crucial role in the nation’s socio-economic development.