India must aim to become a Global Aviation Hub

– Professor Jitamitra Desai
IIM Bangalore

The present war opens up an opportunity for India to model its airports and airlines along the lines of Dubai and Singapore

India, as the world’s third-largest domestic aviation market and projected to become the third largest globally by 2030, the potential for growth is immense.

Yet much of the value generated by Indian passenger traffic bypasses the national economy, flowing instead into sophisticated ecosystems of Dubai (DXB), Singapore (SIN), and Doha (DOH). Every year, millions of Indian travellers opt for routes via these cities, enriching their airlines, MRO facilities, fueling stations, and retail sectors.

Given the current geopolitical trends in the Middle East, the time is ripe for India to transform swiftly to occupy this space and transform into a global aviation hub.

The highly successful models of Emirates Airlines/DXB and Singapore Airlines/SIN represent a holistic strategy that “integrates the airport with a strong anchor airline”, driven by competitive policies, world-class infrastructure, and government-backed economics. In both Dubai and Singapore, aviation is seen as a strategic growth lever.

It begins with relentless focus on infrastructure designed for seamless, high-volume transit. DXB and SIN are engineered for minimal connection times, bottleneck-free passenger flows, and seamless security checks, and baggage handling that enables quick international-to-international transfers, all of which are cornerstones of the “hub-and-spoke” model.

A dominant “home/anchor carrier” is crucial for feeding any hub-and-spoke system. Singapore Airlines and Emirates operate extensive wide-body fleets, linking global cities to their “hubs” and then distributing passengers to smaller “spoke” destinations. They also invest heavily in MRO facilities and aircraft financing onshore, keeping the value within their respective ecosystems.

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In terms of costs, Dubai treats aviation turbine fuel (ATF) as a zero-tax export input, while Singapore exempts it from value-added tax (VAT), thereby directly linking pricing to international benchmarks and significantly reducing operating costs. Another example is DXB that benefits from not having any “night flying” restrictions, allowing Emirates Airlines to achieve industry-leading aircraft utilization rates.

To facilitate transfers from flights across the globe, Singapore has signed over 80 “open sky” agreements, allowing foreign airlines to operate unhindered, thereby increasing connectivity dominated by Singapore Airlines. This aviation strategy is also seamlessly integrated with national tourism and trade goals. Changi Airport’s “jewel” complex and Dubai’s transit exemplify this market model.

The combinations of Singapore Airlines (controlled by the Temasek Holdings) and Changi Airport Group (wholly controlled by the Singapore Government) as well as Emirates Airlines and Dubai Airport (owned entirely by the Investment Corporation of Dubai) are essentially state-owned entities. However, with India adopting public-private partnership (PPP) model for its large metropolitan airports, a state-owned entity mechanism is not viable and therefore this hub airport-anchor airline rights, thereby increasing connectivity dominated by Singapore Airlines. This aviation strategy is also seamlessly integrated with national tourism and trade goals. Changi Airport’s “jewel” complex and Dubai’s transit exemplify this market model.

The combinations of Singapore Airlines (controlled by the Temasek Holdings) and Changi Airport Group (wholly controlled by the Singapore Government) as well as Emirates Airlines and Dubai Airport (owned entirely by the Investment Corporation of Dubai) are essentially state-owned entities. However, with India adopting public-private partnership (PPP) model for its large metropolitan airports, a state-owned entity mechanism is not viable and therefore this hub airport-anchor airline

The largest private firms operating in the aviation space in India are Adani Airports Holding Ltd (which controls eight airports in India, with the largest being Mumbai airport), GMR Group (which controls six airports in India and two internationally, with the largest being New Delhi airport), InterGlobe Aviation that owns IndiGo airlines (65% domestic market share) and Tata Sons that controls Air India (25 per cent domestic market share). If India aspires to be a global transit hub in the near future, the mantle of execution rests on one of these four companies.

Adopting this hub airport – full-service carrier airline synergistic model with a consortium of private firms is a strategic imperative, a path to transforming India from a major origin-destination (O-D) market into a global transit destination via a hub-and-spoke model, capturing significant economic dividends and strengthening global connectivity. A strong aviation hub along with an anchor carrier also strengthens India’s geopolitical influence and “soft power”, providing resilient connectivity and reliable cargo services crucial for trade and supply chains.

Source: The Hindu BusinessLine