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Top stocks in Airline industry-Sector Overview, Market size, Present status and future  

Written by - Rudri Rawell

August 21, 2022 8 minutes

India’s aviation industry is one of the fastest-growing markets in the world. With a 69% contribution to the total South Asian airline traffic, the Indian airline industry is quickly ramping up airport capacity to prepare for the future. The sector has become one of the highlights for investors as it is slated to build capacities for handling close to 1 billion annual trips by next year alone. The sector is governed and closely monitored by the Ministry of Civil Aviation, which designs and implements national aviation policies. 

Here’s a detailed look at the aviation sector in India, including various factors that will drive its growth and possible hurdles in its growth journey

Factors in favour of aviation industry

India continues to be one of the largest aviation markets in the world if the ‘number of seats’ metrics is to go by. In the future, the domestic aviation industry is expected to be the fastest-growing origin-and-destination market globally as per RPK metrics or revenue passenger kilometre metrics. The sector will likely grow at an average yearly rate of 9.5%. 

Some of the factors that are currently driving the growth in the Indian aviation sector are:

  1. Strong market potential

The aviation industry is expected to see increasing passenger traffic in the domestic market, scaling up by almost 12.8% each year. Passenger capacity requirement in the domestic sector, as per the ASK metric or Available Seat Kilometers, may rise by an average of 10.7% annually. With this rising market potential, airlines will also have to ramp up their capacity. 

  1. Preference for flights over trains

The Indian middle class is one of the major contributors to the aviation industry, as air travel offers far more convenience when compared to rail and road travel. Thus, one of the major growth drivers in the aviation sector is more people preferring flights over trains for their travel. Currently, domestic airlines have the capacity to carry only 610 lakh passengers annually. It is expected that crores of passengers will soon be opting-out of train travel and switching to airline travel as their disposable incomes will rise. 

  1. Population size

India’s middle class is growing and the number of households in this segment is expected to reach almost 15 crores in the next 5 years. Additionally, some of the country’s metro cities, including Mumbai and New Delhi, could attain the 25th and 30th ranks respectively among the largest cities in the world, as measured by disposable household income. For the airline industry, more household income and more population will only mean more business.

  1. Rising tourism

People are travelling domestically and internationally more than ever before. If statistics are to go by, close to 7.7 million passengers travelled in February 2022 alone. The airline industry is seeing a growth rate of 9.36% in domestic air traffic. (Source – Zeenews)

Did you know

With the current pace of growth being witnessed in the Indian aviation industry, the sector may likely become the 3rd largest in the world by 2030. 

Growth drivers in aviation sector

Despite the impact of the Covid-19 pandemic, the Indian aviation sector began reviving in 2021 as domestic flight operations came back to pre-covid days. After the international services restarted, the growth trajectory has since been on an upward trend.


As per Union Minister of Aviation, Jyotiraditya Scindia, “India is looking at tremendous expansion. Expansion in the area of airlines, expansion in the area of airports. And therefore, fleet augmentation is also important. A country that had a fleet of only 400 aircraft in the year 2013-14 has grown to a fleet of 710 aircraft in the last seven years, an addition of almost 310 aircraft. And we intend to add at least 110 to 220 aircraft per year as we go forward,”

The sector is also seeing many integrations, new launches and mergers for accelerated growth. For instance, Air India was sold to the Tata Group and a new airline called Akasa Air is slated to be launched by the ace investor Rakesh Jhunjhunwala. 

With the introduction of a new airline, there is likely to be fresh competition and changing dynamics in the Indian aviation sector. 

Increasing privatisation of airports across India is also one of the growth drivers that is infusing healthy competition in the sector. Many large private players are now entering this space to enhance their business profiles and attain growth. 

Road-blocks in the aviation sector growth

Some of the hurdles that the aviation sector is facing in its growth trajectory are:

  1. Competition

With multiple airlines trying to get a larger market share out of the Indian aviation sector, there are only a few that have price-sensitive models like IndiGo airlines. It is one of the few that has showcased consistent performance and remained profitable over the years. Experts are awaiting the launch of Akasa airlines and the performance of Air India after its take-over by the Tata group to see how the future competition will shape up and influence the industry’s growth.

  1. Rising pressure of prices

It is not easy to survive in the Indian aviation industry as airlines often struggle to keep up with the pricing pressures. While fuel prices have been rising, the airlines have not been able to fully pass on the cost burden to passengers since they are known to be extremely price sensitive. As airlines keep the prices low to attract more passengers, the only possible hope is profitability through economies of scale. 

Top stocks in the Indian aviation sector

InterGlobe Enterprises Limited

InterGlobe Enterprises Limited is into aviation management, hotel development and management, and travel-related services. The company’s air travel services are offered under the brand name IndiGo. IndiGo is a low-cost carrier, operating as India’s domestic and international flight service. Apart from flight services, the company offers air and cruise transport management services such as passenger, cargo, destination, charter services, and cruise management. The key details of the company are tabled below.

Market Capitalization Rs. 62,775 crores
PE Ratio
Return on Equity-193.91% (July’22)
Debt Equity Ratio269.35 (July’22)
Promotor’s Holdings74.77%
Share priceRs. 1648 (06 July 2022)
Dividend Yield0.30%

SpiceJet Ltd.

The company’s primary objective is to offer the lowest airfares while maintaining the highest consumer value, especially to cater to price-sensitive consumers. The company has partnered with top global companies like Honeywell, Weber Seats, etc., to maintain maximum safety standards. Apart from the airline business, the company also offers an in-flight entertainment magazine under the name `SpiceRoute`. Some of the company’s other business segments include freight services, logistics, etc. The company’s subsidiaries are also engaged in businesses like real estate and IT. The key details of SpiceJet Ltd. are tabled below.

Market Capitalization Rs. 2,269 crores
PE Ratio
Return on Equity
Debt Equity Ratio– 
Promotor’s Holdings59.40%
Share priceRs. 38.30 (06 July 2022)
Dividend Yield

Jet Airways (India) Ltd.

Jet Airways (India) Limited is an airline operator with domestic and international airline services. The company carries out its operations under two business segments: Air Transportation and Leasing of Aircraft. Jet Airways has been under the insolvency proceedings and has been bought over by a new set of promoters who are planning to restart operations in the second half of 2022. As the company is under insolvency key details of this company are tabled below.

Market Capitalization Rs. 1,192 crores
PE Ratio
Return on Equity
Debt Equity Ratio
Promotor’s Holdings24.99%
Share priceRs. 104.35 (06 July 2022)
Dividend Yield

Global Vectra Helicorp Ltd

Global Vectra Helicorp Ltd is India’s largest private helicopter operator. It has a strong fleet of 29 aircrafts, ranging from small helicopters to medium-sized offering seating capacity in the range of 4-12 people. It is one of the biggest offshore transportation services companies in India. It carries out its operations through the east & west coasts, especially catering to various giants including Reliance, Gujarat State Petroleum Corporation, British Gas, ONGC, etc. The key details of the company are tabled below.

Market Capitalization Rs. 64 crores
PE Ratio
Return on Equity-12.33% (July’22)
Debt Equity Ratio7.91 (July’22)
Promotor’s Holdings75%
Share priceRs. 45.65 (06 July 2022)
Dividend Yield


India’s demographical structure is a big benefit for the country’s aviation sector to flourish in the future. With a constantly rising middle-income segment that has higher disposable income, growing competition amongst Low-Cost Carriers, and rapid development in infrastructure, the airline sector has good potential for strong performance. Apart from this, the government is also focusing on a supportive policy framework to push further growth in the aviation sector. As the demand for air travel is only going upward in India, there is a strong need for a robust ecosystem and the entry of new players into the market.


Is freight traffic part of the aviation sector in India?

Yes, freight traffic is currently contributing significantly to the aviation sector in India. It is likely to be a major contributor with more than 11 million tonnes of freight traffic likely to be seen in India by 2032.

Is the Indian aviation sector globally competitive?

The Indian aviation sector is likely to gain the third position in global standing in the near future. This is mainly driven by the rising air traffic seen in the domestic market.

Why does India mostly have low-cost carriers in the aviation sector?

Due to consumer price sensitivity, the Indian aviation sector has mostly been dominated by low-cost carriers who target middle-class consumers in large numbers.

Which airline is likely to come up with an IPO in 2022?

GoAir is likely to go public with an IPO in 2022. The company has rebranded its airline from GoAir to GoFirst.

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