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Indian Air Travel Dips Amid High Fares, Fuel Costs
29 May
Summary
- Domestic passenger traffic fell 1.6% in April 2026 YoY.
- Airlines face higher fuel costs and a depreciating rupee.
- Industry outlook remains negative due to multiple pressures.
The Indian domestic aviation sector began FY27 with a downturn, as April 2026 passenger traffic decreased 1.6% year-on-year. This decline is attributed to elevated airfares, increased aviation turbine fuel (ATF) prices, and geopolitical disruptions impacting travel demand. Airlines are also contending with a depreciating rupee and operational challenges.
Capacity deployment by airlines remained weak, with fewer departures in April 2026 compared to the previous year. Despite these headwinds, passenger load factors stayed high at an estimated 85.9% for the month. The industry's outlook is negative, with projections for industry net losses being revised downwards due to ongoing cost pressures.
Supply chain disruptions, including grounded aircraft due to engine issues, continue to affect the sector. Government measures, such as reduced landing charges and a credit guarantee scheme, alongside VAT reductions on ATF in key states, aim to provide some relief. However, rising fuel costs and currency depreciation remain significant concerns.
