India’s domestic air traffic growth slows in FY26 as capacity tightens

New Delhi: India’s domestic air passenger growth slowed to its weakest pace since the pandemic recovery, weighed down by reduced aircraft availability across airlines.

Domestic air passenger traffic rose just 1.33% year-on-year to 167.46 million in FY26, sharply down from over 7% growth in FY25, according to data from the Directorate General of Civil Aviation (DGCA). Passenger traffic was 165.38 million in FY25.

The slowdown marks a steep moderation from the post-covid rebound in FY22 and FY23, when growth had exceeded 50%.

During FY26, India’s two largest operators, Air India and IndiGo, had fewer planes in the air amid heightened regulatory scrutiny.

Air India scaled back operations following a plane crash in June, which triggered stricter safety checks. The airline reduced its winter schedule (November-March) by 10%.

IndiGo, meanwhile, faced an operational meltdown in December due to its inability to manage the revised pilot duty and rest hours. This led the DGCA to order a 10% cut in its schedule until March, thereby impacting the number of flights.

The slots vacated by IndiGo did not find takers across other airlines, leaving fewer planes in operation, an industry executive told Mint.

“The operating fleet for Air India (group) was 270-280 planes, as the company has been phasing out old planes and returning them to lessors. On the other hand, IndiGo faced regulatory action leading to fewer flights since December. Their operating fleet count is around 375,” said Gagan Dixit, senior vice president- aviation, chemicals, oil & gas at Elara Securities.

Smaller player Akasa Air added new planes, but these were not significant enough to make up for reduced capacities by the two large players, he added. Akasa Air’s fleet count is at 38, as of April 2026.

Air India group’s reported fleet count (including that of low-cost carrier Air India Express) is 290, and that of IndiGo is 440, as of December 2025.

Ratings agency, Icra Ltd, in an April 2026 note, said the full-year capacity deployment (across airlines) was largely flat, after rising 7.3% in FY25. Airlines also continued to grapple with Pratt & Whitney engine failures and supply chain issues, which left 117 aircraft grounded as of February 2026 — about 13–15% of the total industry fleet.

“Although airlines attempted to redeploy capacity onto domestic routes, absorption has been constrained by limited slot availability at key metro airports, especially during peak hours. Further, aircraft-on-ground (AOG) owing to engine-related issues and supply-chain challenges, have also affected operational aircraft availability,” said Kinjal Shah, senior vice president and co-group head, Corporate Ratings, Icra Ltd.

While airlines added new aircraft to their fleet, such as IndiGo adding XLRs or Air India adding new wide-bodied Dreamliners. These additions are mostly for international operations.

The year had been a tough one for Indian aviation as airspace closure over Pakistan since May 2025 had led to airlines taking longer routes for key European and North American destinations, which pushed up operational costs.

In March, the sector faced further headwinds as the war in West Asia severely impacted operations in the region, a key market, and led to an increase in jet fuel prices.

The fallout on domestic operations was unmissable. Airlines began passing on higher fuel costs to passengers through a fuel surcharge. This meant prices going up, and impacting travel sentiments from March.

Passenger traffic in March fell 0.87% year-on-year to 14.4 million , from 14.54 million in March 2025, as per DGCA data. Icra had forecast a 1% rise to 14.68 million.

“The capacity deployment for March 2026 was lower by 3% over March 2025 (around 99,204 departures in March 2026 against 102,319 in March 2025). In FY26, the capacity deployment remained largely flat, after a rise of the same by 7.3% in FY2025," it added.

March was the fifth month in FY26 in which passenger traffic declined compared to the same month in the previous fiscal year. Traffic slipped the most in December by 4% followed by July and September at 3% each, and August (1.4%).

“In March, ticket prices started going up. Airlines also came up with fuel surcharges. And this impacted travel sentiments. Earlier, in December, mass cancellations by IndiGo impacted travel,” said Mohan Ranganathan, an aviation expert and a former member of the Civil Aviation Safety Council.

In comparison, rail travel saw a significant surge in FY26. Indian Railways saw record passenger growth in the financial year, carrying 741 crore passengers, a 3.54% increase from 716 crore in FY25. Passenger revenue rose to approximately ₹80,000 crore, a 5.96% increase.

Passenger traffic surged by 34%, specifically on Vande Bharat routes (high-speed corridors), as per Indian Railway officials. Railways operate approximately 25,000 trains daily.

“Domestic PAX (passenger) traffic in FY25 grew by 7% YoY, driven largely by strong demand in Q3/Q4, which saw growth of 9%/11%, owing to Mahakumbh and a high number of wedding dates,” said Karan Khanna, Lead Analyst for Aviation at brokerage firm Ambit Capital.

”In contrast, FY26 proved to be a turbulent year. Q1/Q2 were adversely impacted by events such as Operation Sindoor and the AI 171 crash, while Q3/Q4 faced disruptions from widespread flight cancellations in December, along with ongoing geopolitical tensions, all of which weighed on domestic passenger growth."