India’s Next Phase of Aviation Growth Puts Focus on Cross-Border Capacity Choices

Matthew Dass, Director of Consulting at Tourism Economics, says policy decisions on India UAE air links will influence passenger movement and economic outcomes through 2035

A new study has highlighted how policy decisions on international aviation capacity will shape the future of air travel between India and the United Arab Emirates, as passenger demand continues to rise across one of the region’s most significant air corridors.
The analysis indicates that if flight and seat capacity between India and the UAE remain at current levels, a substantial share of projected passenger demand may not be accommodated over the coming decade. By 2035, this could translate into tens of millions of passenger journeys that remain unserved, with the Abu Dhabi India corridor facing particularly pronounced pressure.

The study points to structural changes in India’s aviation market as a key driver of long term demand. India’s travelling class, defined as households with sufficient income to travel by air, has expanded from 24 percent of the population in 2010 to 40 percent in 2024, adding nearly 300 million potential flyers. As a result, overall air travel demand is projected to grow at an average rate of 7.2 percent annually through 2035, equivalent to nearly 22 million additional passenger journeys per year.
Commenting on the findings, Matthew Dass, Director of Consulting at Tourism Economics, said that demand on India UAE routes is being driven by rising incomes, expanding trade links, and growing inbound and outbound tourism. He noted that load factors on major routes already exceed 80 percent, signalling limited spare capacity under current schedules, with available seats expected to be fully utilised as early as 2026.

Beyond passenger volumes, the study also examines the economic activity supported by the India UAE air corridor, including tourism spending by inbound travellers and operational expenditure by airlines. Under scenarios where capacity constraints persist, the corridor’s contribution to gross domestic product is projected to grow at a compound annual rate of 3 percent over the next five years. Alternative scenarios that ease capacity limits could raise this growth to between 5.5 percent and 7 percent.
The analysis estimates that doubling seat capacity on the Abu Dhabi India corridor alone could enable an additional 7.2 billion dollars in economic output over the next five years, accounting for direct, indirect, and induced impacts. Such expansion is also expected to support more than 170,000 jobs per year on average during the same period.

The report further suggests that improved air connectivity may deliver longer term productivity gains of up to 9 billion dollars annually by 2035, while increased capacity and competition could help place downward pressure on airfares, benefiting consumers.
The study concludes that aviation policy choices will play a decisive role in determining whether India is able to fully capture the economic and consumer benefits associated with continued growth in international air travel. The research was commissioned by Etihad Airways and conducted by Tourism Economics.

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