Nearly 27 per cent of forecast passenger demand between India and the UAE could go unserved by 2035 if air‑service capacity remains unchanged, a study showed on Monday.

The report by Tourism Economics, commissioned by Etihad Airways, paints a stark picture: demand on one of India’s busiest international corridors is rising rapidly, but regulatory limits and supply bottlenecks are preventing airlines from meeting that demand. The study notes that at current entitlement levels, “remaining spare capacity is expected to be fully absorbed by 2026,” after which the gap between supply and demand will widen sharply.

Tourism Economics projects that annual passenger volumes along the UAE–India air corridor could approach 25 million by 2035. Yet under fixed capacity, 10.8 million passengers annually would be unable to secure seats. Over the decade from 2026 to 2035, the cumulative unmet demand could reach 54.5 million passengers, an amount equal to 27 per cent of total projected demand under an unconstrained scenario.

Abu Dhabi corridor nearing saturation

The Abu Dhabi–India segment faces a similarly severe crunch. Under the current Air Services Agreement (ASA), Abu Dhabi‑based carriers are capped at 50,000 weekly seats across 11 designated Indian cities, a limit the report says is “already fully utilised,” with load factors “consistently exceeding 85 per cent” on major routes throughout the year. Should these restrictions continue, the corridor is expected to suffer a 13.2‑million‑passenger shortfall between 2026 and 2035—again amounting to roughly 27 per cent of projected demand.

This constraint‑driven gap is not the result of weak fundamentals. Instead, they write that “the pronounced supply shortages observed on these corridors are artificial in nature, driven primarily by capacity constraints rather than weak demand.”

Matthew Dass, Director of Consulting, from Tourism Economics, said: “India–UAE air travel demand is growing rapidly, underpinned by rising incomes, expanding international trade, and increasing outbound and inbound tourism. Load factors exceed 80 per cent on major routes in the study period, indicating limited spare capacity under current schedules. In our baseline outlook, the gap between forecast demand and available seats widens over time and available capacity is expected to be exhausted by 2026.”

Aviation demand surges as India’s travelling class expands

India’s wider aviation landscape helps explain this pressure. The country has sustained an average GDP growth rate of 7.3 per cent between 2010 and 2024, fuelling a dramatic expansion in households with the means to fly. The study highlights that the proportion of “travelling‑class” households rose from 24 per cent in 2010 to 40 per cent in 2024, supporting a powerful long‑term demand engine. As a result, unconstrained air‑travel demand to, from, and within India is projected to grow by 7.2 per cent a year over the next decade.

Within this context, the UAE has emerged as India’s single most important international aviation partner. Passenger traffic between the two countries is projected to reach 16.4 million in 2025, accounting for 19.8 per cent of all international travel to and from India—a share more than 70 per cent larger than that of the next biggest market.

Economic value at stake as unmet demand grows

The study argues that the consequences of constrained capacity extend far beyond aviation metrics. In 2025 alone, the UAE–India air corridor is expected to support 4 million inbound travellers, enable $7.7 billion (₹670 billion) in GDP, sustain around one million jobs, and generate approximately $1.2 billion (₹108 billion) in tax revenues.

But under current limits, this economic footprint would grow at a modest 3 per cent annually until 2030. The authors warn that unmet demand directly translates into lost tourism revenue, reduced business travel, limited trade access, and weaker consumer affordability.

If capacity were expanded, the economic gains would be substantial. Under a 50 per cent increase in allowed seats, GDP contributions from the corridor would rise at a 5.5 per cent compound annual rate. Under a 100 per cent uplift, the annual GDP growth rate supported by the corridor would accelerate to 7 per cent. Between 2026 and 2030, doubling capacity could deliver $7.2 billion in additional GDP, support an average of 170,000 extra jobs per year, and generate nearly $1.2 billion (₹102 billion) in additional tax revenues.

The report stresses that these are not just near‑term benefits. By 2035, improved connectivity between India and the UAE could boost India’s GDP by $9 billion, support $550 million in annual foreign‑direct investment inflows, and enable $75 million in additional exports. Consumers would gain as well: expanded routing options and intensified competition are expected to lower long‑haul fares by about 3 per cent, equating to $12 in savings per passenger, and produce a $91‑million increase in consumer surplus for more than seven million travellers in 2035.

Tier‑2 cities remain a missed opportunity

Another key finding is that India’s fastest‑growing economic regions — Tier‑2 cities such as Pune, Lucknow, Goa, Mangalore and Vadodara — remain cut off from direct Abu Dhabi connectivity due to the ASA’s narrow list of permitted airports. This forces passengers through hubs like Delhi and Mumbai, increasing travel time, suppressing demand, and diverting high‑value tourism and investment to competing destinations.

The report suggests that expanding the ASA to include these cities would help decongest major metros and unlock regional tourism and business potential. Under a 100 per cent uplift scenario, the study estimates that Abu Dhabi‑based carriers could bring 1 million inbound visitors to Pune, 0.8 million to Goa, and 2.8 million additional travellers across new destinations between 2026 and 2030.

A call for urgent policy action

In its final assessment, the study warns that without immediate renegotiation of the bilateral agreement, air travel between India and the UAE “risks becoming increasingly constrained,” with more than one in four prospective passengers unable to find flights by 2035. With India now one of the world’s fastest‑growing aviation markets, the authors argue that expanding capacity on the UAE–India corridor is essential—not only for meeting demand but for capturing billions in economic potential that otherwise will be left on the table.