Opening Skies for International Flights: Can It 2X India's Global Trade?

Recently, India's aviation sector has seen renewed debate over expanding global connectivity and open skies.

According to recent news, the Adani Group has publicly urged the government to expand international flying rights, arguing that this could help Indian airports become global aviation hubs. This proposal asks the Indian government to expedite negotiations with several countries, including Saudi Arabia, Indonesia, and Malaysia, to enhance connectivity and position Indian airports as global transit hubs.

At the same time, major domestic airlines including Air India and IndiGo urge caution and warn that unrestricted access for foreign carriers could cause undue pressure on local players and create unfair competition.

This tug-of-war between airport operators and airlines made us as a logistics expert delve into some deeper questions:

Can a liberalized aviation regime actually double (2X) India's global trade?

Will India be able to replicate the success of Singapore, Dubai, and Hong Kong and become a global travel and trade hub by allowing foreign airlines?

In this post, we explore various aspects of this topic. We look at what open skies really mean for the current structure of Indian aviation and whether flights alone can transform trade.

What Is the Open Skies Agreement?

The Open Skies agreement is an air transport policy that removes many government restrictions on international flights between countries. It allows airlines from both sides greater freedom to decide routes, flight frequency, and capacity. This agreement focuses on connectivity and competition, rather than bilateral quota limitations.

For travelers, this often leads to lower fares, more flight options, and better global connectivity. For airports, it can increase passenger traffic and revenue. However, trade remains a more complex situation and requires further analysis.

The Indian Airline Duopoly: History and Current Reality

For decades, India's aviation market has been evolving rapidly. Today, the sector is characterized by a duopoly-like dominance of two major airline groups, IndiGo and Air India. Stats show IndiGo held around 64% of the domestic market share, far ahead of any rival. On the other hand, Air India commands around 27% of the domestic share and is India's largest airline in international traffic.

Together, these two groups control over 90% of the market, effectively functioning as a duopoly, even as smaller carriers like Akasa Air are trying to make in-roads.

In response to concerns about concentration, the government recently approved entry to new airlines such as Al Hind Air and FlyExpress to encourage competition, though their scale is very small compared to the giants.

Factors That Make India's Aviation Sector Unique

Rapid Passenger Growth

India is one of the fastest-growing civil aviation markets in the world, serving hundreds of millions of passengers annually.

Rapid Infrastructure Expansion

Airports across India are expanding capacity to handle higher passenger and aircraft volumes.

New World-Class Airports

Projects like Navi Mumbai and Jewar (Delhi) are also being developed, supporting large-scale international operations.

Growing Middle Class & Business Travel

India has a growing middle class, which is driving steady growth in outbound tourism, education, and corporate travel.

Strategic Geographic Location

India has a strategic location between Europe, the Middle East, and Southeast Asia, making it ideal for international transit routes.

Research Insight on Liberalizing India's Air Services

• Lower airfares and consumer savings — Liberalizing air services could bring substantial benefits for Indian travelers. Research confirms that a 1% increase in passenger volume between India and the UAE can lead to a 0.2% reduction in average airfares and that doubling capacity over five years could generate more than $1 billion in savings for Indian travelers.
• Trade and tourism boost — Research shows that better connectivity facilitates business travel, investment, and tourism — all of which indirectly support trade.
• Improved job opportunities — Liberalizing air services boosts employment and drives economic growth. A study from IATA.org confirms that increased connectivity creates jobs and supports tourism and logistics.

Why Can't Open Skies Alone 2X Trade?

While open skies make international travel easier and more affordable, they are not enough to significantly boost India's global trade.

1. In practice, aviation liberalization must be balanced with protecting Indian airlines, which are still growing their international operations. Allowing international behemoths might just wipe out the progress that Indian airlines have achieved.
2. Indian logistics is still dependent on road transport. We have been moving towards multi-modal transport, but it is yet to gain full-steam. This means that if the first mile or last mile distribution remains slow or fragmented then extra flights won't convert to increased trade.
3. Air Cargo still remains the costliest mode of transport across the world, hence simply increasing flights will not mean consumers will move towards air transport.
4. Highly skilled cargo and ground staff is a bottleneck. Fluctuating tariffs and competition can put added pressure on human capital while keeping end-to-end air freight expensive.
5. Specialised requirements like cold chain readiness are uneven. Open skies won't fix temperature-controlled storage, packaging, tarmac-to-warehouse integrity, or lane discipline across the network.

At the same time, overall trade growth depends on many other factors besides passenger connectivity. It requires strong financial systems, efficient cargo and logistics infrastructure to support investment and business demand. Without these, open skies will improve connectivity but will not create a major increase in trade.

Conclusion

Open skies can meaningfully boost India's connectivity, travel, tourism, and passenger growth. They can help unlock the potential of new airports and give consumers more choices.

However, expecting open skies to double India's global trade on their own is unrealistic. For that, India needs a broader ecosystem: world-class cargo infrastructure, streamlined trade processes, integrated logistics corridors, and deeper economic partnerships.

If India wants to truly become a global hub for travel and trade, open skies must be part of a much bigger vision, not the destination itself. What are your thoughts? Share with us in the comment section.