A surge in aircraft capacity, long-term network ambitions, and India’s protectionist policies are all reshaping the competition between Gulf and Indian airlines. As the Indian aviation industry pushes to grow its international expansion, market share for UAE-based airlines’ is shrinking.

Incumbents boxed in: Dubai and Abu Dhabi are nearly maxed out on seat quotas set by UAE’s bilateral agreements with India. Without new bilateral pacts with UAE and Qatar — which New Delhi has blocked to protect its local carriers — Emirates and Qatar Airways are forced to chase premiumization over volume.

On the Abu Dhabi-India corridor — accounting for 4.5% of the total international market — a bilateral limit caps seats at 50k per week. As a result, 54.5 mn potential travelers will “remain unserved or must utilize indirect, higher-cost routes between 2026 and 2035,” according to a Tourism Economics report (pdf). Doubling the bilateral quotas would add 3.5 mn additional inbound passengers through 2030, drastically reducing the unmet demand.

While Dubai flag carrier Emirates has repeatedly lobbied to ease seat caps between India and the UAE, India has resisted these demands to prioritize the expansion of local carriers. Mumbai-based Indigo supports the government’s policy as it scales its own international footprint — to the dismay of UAE-based carriers. “We’ve been stuck with 65k seats in each direction for just over 11 years now (during which period the demand for travel has grown exponentially). For every seat we sell, there are probably 10 takers,” Emirates’ President Tim Clark told Times of India last year.

Corridor in transition: The India-Gulf aviation bridge has long been shaped by migrant labor and transit traffic, but policy measures and capacity expansion on both sides are altering the balance. “Indian carriers largely cater to point-to-point traffic in the Gulf and are now gearing up for connecting traffic,” aviation analyst and former network planner Ameya Joshi told EnterpriseAM. These ambitions are running into direct competition with Gulf carriers.

India’s market play

India is expanding its airport infrastructure to meet international travel demand. India’s busiest airports Bengaluru, Delhi, and Goa have all added terminals or runways in the last 18 months. Indian carriers are using this new bandwidth to schedule more direct international flights during peak hours, especially to the Gulf.

India’s largest airline, Indigo, operates international services from multiple Indian cities to several Gulf markets. Air India Express has expanded its international services from hubs such as Bengaluru and Delhi, particularly on the Gulf route. New low-cost players like Al Hind Air are also preparing to enter the market in 2026, targeting price-sensitive tier-2 Indian city routes.

Looking ahead, the pace at which bilateral limits change will shape how durable India’s recent gains prove to be. “Bilateral restrictions won’t ease overnight. They will ease at a time when Indian carriers are ready to compete effectively with the Gulf players,” Joshi said.

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