- India's domestic aviation growth slowed sharply from double-digit to 1.2% in FY2026
- Passenger traffic declined 5% in April 2026 and showed drops in four of six months after
- Higher airfares and elevated fuel costs pressured airlines to limit capacity and protect yields
India's domestic aviation market, which had been one of the fastest-growing segments of the country's travel economy, is showing signs of a sharp slowdown, with passenger traffic shifting from double-digit annual growth to outright declines in recent months. Domestic passenger traffic rose 13% year-on-year to 153.6 million in fiscal 2024, according to data compiled by NDTV Profit. Growth moderated to 7.7% in fiscal 2025, with passenger traffic reaching 165.5 million. In fiscal 2026, however, traffic increased just 1.2% to 167.5 million.
The slowdown has become more pronounced in the current financial year. Domestic passenger traffic fell 5% year-on-year to 13.8 million in April 2026, before rising 9% in May. Traffic then declined 1% in June, 5% in July, 6% in August and 7% in September.
The consecutive declines in the past four months raise questions over whether India's aviation boom is entering a temporary period of capacity and demand adjustment.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
Why India's Domestic Passenger Numbers Are Falling
One of the key factors behind the slowdown is higher airfares. Airlines are increasingly focusing on protecting yields rather than maximising passenger numbers as their cost pressures remain elevated.
Brent crude has remained above $100 a barrel, while the Indian rupee has also weakened. Aviation turbine fuel is a major cost component for airlines, accounting for around 35-40% of total costs. At the same time, around 70% of airline costs are dollar-denominated, making a weaker rupee another pressure point.
With airlines facing higher operating costs, lower fares could put pressure on profitability. As a result, airlines have been more cautious about stimulating traffic through aggressive pricing.
This can particularly affect price-sensitive travellers, who may postpone discretionary trips or opt for alternative modes of transport.
The slowdown is also partly a supply-side phenomenon. Airlines have been restricting capacity and reducing flight departures to protect profitability amid elevated costs. A reduction in available seat kilometres means fewer seats and flight options for passengers, which naturally limits the pace at which traffic can grow.
This is important because India's underlying demand for air travel may not have weakened to the same extent as the passenger numbers suggest. A portion of the decline could instead reflect airlines deliberately keeping capacity in check.
Aircraft availability is another constraint. Boeing's slower aircraft deliveries have affected the ability of airlines to expand their fleets and increase capacity. This has particularly affected expansion plans at Air India and Akasa Air, both of which are in the process of building up their fleets.
SpiceJet, meanwhile, has seen a particularly sharp contraction in operations amid funding constraints, further reducing available capacity in the market.
The aviation sector has faced a series of disruptions over the past 18 months, potentially affecting consumer confidence around air travel. The Pahalgam terrorist attack in April 2025 was followed by the India-Pakistan conflict. In June 2025, the Air India AI171 crash further affected sentiment, while the Israel-Iran conflict added another layer of uncertainty for international travellers.
The sector subsequently faced the IndiGo operational crisis in December 2025, followed by the Middle East conflict in March 2026.
While each event had a different impact, the repeated disruptions may have encouraged some travellers to defer or reconsider air journeys, particularly discretionary travel.
Is This A Temporary Slowdown?
Despite the recent weakness, the data does not necessarily point to a structural deterioration in India's air-travel demand. Hotel demand remains resilient, suggesting that the broader appetite for travel has not disappeared. This is important because a sustained structural slowdown in aviation would typically be accompanied by broader weakness across the travel ecosystem.
READ | IndiGo Patna-Lucknow Flight Hit By Lightning Mid-Air, Nose Damaged; Lands Safely
The industry's aircraft order book also provides a strong indication of the long-term growth expectations for Indian aviation.
Indian airlines have placed orders for more than 1,600 aircraft, compared with a current combined fleet of around 850-860 aircraft. The scale of these orders suggests that airlines continue to expect substantial long-term growth in passenger demand and believe India's penetration of air travel has considerable room to rise.
The current slowdown could therefore be more about capacity constraints, high costs and near-term uncertainty than a fundamental change in the long-term trajectory of Indian aviation.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
