As President Trump begins his second term in 2025, a fresh wave of tariffs is reshaping the global trade landscape. These aggressive protectionist policies are set to challenge many sectors, but not all. Several businesses will survive Trump tariffs and even thrive under them. From domestic manufacturing to local agriculture, these resilient industries are poised to benefit from reduced foreign competition and increased national demand. In this blog, we explore the top sector likely to outperform in a tariff-heavy economy.
Aviation Sector in India: A High-Risk, High-Growth Opportunity
In the world of investing, the primary focus should always be on the business fundamentals. The most important factor to look for is growth — what we call "Vitamin G" in the stock market.
No matter how large or established a company may be, if it lacks growth, investor capital remains stagnant. Companies that are still growing — often smaller or mid-sized ones — tend to deliver better returns, albeit with higher risks.
Why the Aviation Sector?
In a country like India, with numerous high-potential sectors, aviation stands out. While international geopolitical factors, such as policy changes from global leaders like Donald Trump, may indirectly impact industries, aviation in India continues to expand at a rapid pace.
Airplanes are predominantly manufactured by two global giants: Boeing and Airbus. While import costs and international trade policies might influence supply chains, the domestic demand for air travel in India shows resilience and strong upward momentum.
Growth of Aviation in Daily Life
A large segment of India’s population has yet to experience air travel. This untapped user base will drive demand as air travel becomes more affordable and accessible. Frequent flyers, especially business professionals, now rely on weekend flights as a routine part of their lifestyle. Air travel is no longer a luxury but a necessity for many.
According to 2024 data, India recorded over 5 lakh (500,000) domestic flyers in a single day, highlighting a surge in air travel demand.
This figure is expected to increase during festivals and wedding seasons, particularly in Q3 (October to December).
Strong Growth Numbers
Domestic passenger growth (YoY): ~11%
International passenger growth: ~15–20%
Overall industry CAGR: ~9%
These figures confirm the sector’s robust future outlook.
Market Structure and Competitive Advantage
The Indian airline sector has limited listed players, creating an advantage in terms of reduced competition on the stock market. Competitors within the industry include IndiGo, Air India, Akasa Air, and SpiceJet, but many others are either unlisted or state-owned.
In terms of transportation alternatives — like trains or buses — air travel remains unmatched for long-distance journeys. Infrastructure projects like bullet trains are still years from full-scale operation, reinforcing the airline industry’s relevance.
Challenges and Risks
Despite the growth, the aviation sector carries several risks:
1. Food & Beverages (F&B) Revenue Dependency
Airlines generate significant revenue from food and beverage sales. IndiGo reportedly earns more from F&B than established restaurant chains like Barbeque Nation. However, recent government initiatives to make food more affordable at airports may impact this revenue stream. These steps were reportedly influenced by discussions in Parliament, raising concerns about overpriced meals.
2. Operational and Financial Challenges
The airline industry is notoriously difficult to operate in. As Richard Branson famously said:
“The quickest way to become a millionaire in the airline business is to start as a billionaire.”
India has seen several major airline failures:
Kingfisher Airlines
Jet Airways
Go First (GoAir)
Air India (before being sold to the Tata Group)
While the growth potential is high, so is the financial risk.
Listed Airline Companies in India
1. IndiGo (InterGlobe Aviation)
Market Cap: ~₹2 Lakh Crore
Reserves: Positive (~₹1,600 Crore)
Long-Term Debt: Zero
Short-Term Debt: ~₹1,800–1,900 Crore
Cash & Equivalents: ~₹16,000–17,000 Crore
Profitability: Back in profit
Shareholding: Strong promoter and institutional holding
IndiGo is currently the market leader with a dominant position in Indian skies.
2. SpiceJet (SIJet)
Market Cap: ~₹7,000 Crore
Reserves: Negative
Debt: High
Cash Reserves: Limited
Profitability: Loss-making for several years
Market Share:
Domestic: ~5.25%
International: ~1.5%
Shareholding Pattern:
Promoters: ~33%
FIIs/DIIs: ~11–13%
Public: Majority
Competition: Losing market share to newer entrants like Akasa Air
The airline industry in India offers a high-growth, high-risk investment scenario. With limited listed players and strong demand fundamentals, the sector holds promise. However, the operational challenges are significant, and only companies with sound management and strong balance sheets are likely to thrive.
Disclaimer: This analysis is for educational purposes only. It is not investment advice. Always do your research or consult a financial advisor before making investment decisions.
