YCE Auctus report reveals India’s aviation market set to triple
Noida International Airport – set to become India’s largest – embodies the country’s explosive aviation growth. While the first flight has yet to launch, operations are expected to commence soon
A recent report by YCP Auctus reveals India’s aviation and travel retail sectors are at a critical inflection point, with transformative growth being driven by three key factors: rising disposable incomes, aggressive infrastructure development across tier 2 and 3 cities and rapidly evolving consumer preferences. This shift is particularly pronounced among Gen Z and Millennial travelers, who now represent nearly two-thirds (63%) of India’s international passenger base and are reshaping expectations around experiences, sustainability and digital integration.
Airport expansion
India’s aviation sector is undergoing a fundamental transformation, moving beyond its traditional metro-centric model. Non-metro airports now account for nearly 40% of total passenger traffic, up from 32% in 2015, and are growing at a rate approximately three times faster than their metro counterparts. With 146 million passengers flying from non-metro airports in FY24, the shift in passenger demand toward Tier 2/3 locations is unmistakable.
The Indian airport network is set to grow from 74 commercial airports in 2014 to 205 by 2034. This expansion is particularly pronounced in smaller cities, with projections indicating that Tier 3 and 4 cities will host 75% of India’s total airports by 2047 (203 airports compared to just 55 in metros and Tier 1-2 cities). To support this growth, the National Infrastructure Pipeline has finalized 124 projects with a total investment of ₹22.7 billion (US$273 million, based on May 2025 exchange rates).
This decentralization has been catalyzed by initiatives like UDAN (Ude Desh ka Aam Nagrik), which has connected 88 previously underserved airports and operationalized 619 regional routes. The government has already invested ₹41.4 billion (US$496 million) under the UDAN scheme to revive underserved airports and is aiming to privatize an additional 11 airports by the end of 2026.
Aviation traffic growth
India’s airport passenger traffic is projected to increase by 2.5 times, from 377 million in 2024 to 946 million by 2034, growing at a CAGR of 9.6% during this period. Despite this impressive growth, India’s trips per capita of just 0.14 remains significantly lower than global benchmarks like the United Arab Emirates (3.0), United Kingdom (2.25), and even regional peers like China (0.46) and Indonesia (0.54), highlighting substantial room for further growth.
International travel from India has rebounded impressively, with outbound departures reaching 30.2 million in 2024, exceeding pre-pandemic levels. This recovery has been primarily driven by leisure travel, which now accounts for 42.5% of all outbound trips, up from 39.4% in 2019, while business travel has decreased from 18.9% to 14.2%.
India has demonstrated the fastest CAGR growth in outbound trips among South Asian countries between 2019 and 2024, with projections suggesting this momentum will continue, potentially reaching 52 million departures by 2029 (CAGR of 11.5%).
India’s top airlines are aggressively betting on growth expectations with substantial fleet orders: IndiGo (540 aircraft), Air India post-Vistara merger (595 aircraft), and Akasa Air (154 aircraft). Low-cost carriers have reshaped India’s aviation ecosystem, now commanding 78% of domestic passenger traffic and 46% of international traffic (FY24).
The country’s aviation fleet is projected to grow from 834 aircraft in 2024 to over 2,500 by 2034, positioning India for a supply-led growth phase that’s environmentally aligned and regionally inclusive.
The Gen Z and Millennial influence
Perhaps the most significant shift in the market has been the emergence of Gen Z and Millennials as the dominant demographic in India’s international traveler base. Together, they constitute 63% of all outbound travelers, with 48% under the age of 35.
These younger travelers prioritize experiences over material possessions, make impulsive luxury purchases (with 60%+ penetration in categories like jewelry and leather goods), and show strong preferences for sustainable and ethically sourced products, willing to pay a premium of approximately 13.1% for such items.
Their decisions are heavily influenced by digital content, with 42% planning trips based on short-form video content and 73% self-booking their travel through digital platforms. Young Indian travelers increasingly spend on spa access, local tours and curated events over material souvenirs.
India’s per capita disposable income has shown steady growth post-2020 and is expected to double in five years, crossing US$4,000 by 2029 from US$2,100 in 2019. The middle and high-income population is projected to grow from 29% in FY16 to 58% in FY31 – a 2X increase that will fuel discretionary spending across urbanizing non-metro cities.
India’s number of high-net-worth individuals is set to nearly double in three years, rising from 0.85 million in 2024 to 1.65 million by 2027, and the country’s luxury goods market is the second-fastest growing globally with a growth rate of 32%.
Category reset
Duty free in India is evolving beyond alcohol and tobacco. Beauty, wellness, tech accessories, gourmet foods and heritage artisanal products are becoming central to the retail mix. These emerging categories are growing 2.5 times faster than legacy staples, signaling a major shift in duty free merchandising priorities.
The brand landscape is equally dynamic, with global brands implementing India-first strategies through localized assortments, festival-themed packaging and cultural storytelling. Simultaneously, premium Indian brands like Forest Essentials, Kama Ayurveda, and Nappa Dori are gaining international recognition, leveraging their cultural heritage to appeal to global audiences.
Travel retail in India is becoming experience-first. Multisensory store environments, localized product zones and influencer-led brand activations are emerging as key tools to increase dwell time and engagement. According to recent findings, 47% of Indian consumers cite in-store experience as a primary purchase driver, with staff interaction ranked as the most important influencing factor for duty free buyers (80% impact).
Digital innovation is playing an increasingly critical role, enabling personalization, seamless checkout experiences and immersive brand interactions. Looking ahead, emerging technologies like AR/VR experiences, biometric verification and AI-driven personalization are expected to further transform the customer journey.
Sustainability imperative
Environmental consciousness has emerged as a significant factor in consumer decision-making, with 60% of Indian consumers changing their purchasing habits to favor sustainable products. They seek eco-friendly packaging, cruelty-free and vegan products, and brands with visible sustainability practices.
This shift is prompting retailers to integrate sustainability across operations, from store design (LED lighting, reclaimed wood, energy-efficient HVAC) and product curation (eco-friendly brands, refillable perfumes) to packaging (paper/jute bags, biodegradable wraps) and supply chain management (local sourcing, reduced carbon-mile SKUs).
Duty free policies
Despite these positive developments, outdated duty free policies present a potential limiting factor. India’s duty free allowance thresholds have seen minimal revision over the past decade and no longer reflect rising affluence or global benchmarks. The general duty free purchase allowance has remained at ₹50,000 (US$600) since 2016, though accounting for inflation and rupee devaluation it should be approximately ₹94,000 (US$1,130) today.
Countries like Japan offer more generous duty free caps (up to ¥200,000, approximately US$1,300), while others allow pooling of allowances across family members (Australia) or differentiated thresholds based on trip duration (Singapore). Aligning with such global best practices could unlock significant new spending.
