India's domestic air travel growth slows to 1%
What's the story
India's domestic air passenger traffic has witnessed a major slowdown in FY26, growing just 1.33% year-on-year to 16.75 million passengers. The growth rate is a far cry from the over 7% increase seen in FY25, according to data from the Directorate General of Civil Aviation (DGCA). This is the slowest pace of growth since the pandemic recovery period and can be attributed to reduced aircraft availability across airlines.
Operational hurdles
Air India, IndiGo reduce flights due to regulatory scrutiny
India's two largest airlines, Air India and IndiGo, have been operating with fewer planes amid increased regulatory scrutiny. After a plane crash in June, Air India had to scale back its operations due to stricter safety checks. The airline reduced its winter schedule (November-March) by 10%. IndiGo also faced an operational meltdown in December after failing to manage revised pilot duty and rest hours. This led DGCA to order a 10% cut in its schedule until March, further reducing flights.
Capacity constraints
Aircraft availability issues across major airlines
Air India's operating fleet was between 270-280 planes as it phased out old ones and returned them to lessors. IndiGo's fleet count is around 375 but has been affected by regulatory action leading to fewer flights since December. Smaller player Akasa Air added new planes but these weren't enough to offset the reduced capacities of larger players. Engine failures and supply chain issues have left 117 aircraft grounded as of February, accounting for about 13-15% of the total industry fleet.
Cost pressures
Soaring operational costs and ticket prices affect travel sentiments
The closure of airspace over Pakistan since May 2025 has forced airlines to take longer routes for key European and North American destinations, increasing operational costs. The West Asia conflict also severely impacted operations in the region and led to a spike in jet fuel prices. As a result, airlines started passing on higher fuel costs through surcharges, pushing ticket prices up and affecting travel sentiments from March onward.
Rail growth
Meanwhile, railways record all-time high of over 740cr passengers
Amid the slowdown in air traffic, rail travel has seen a major spike in FY26. Indian Railways recorded an all-time high of 741 crore passengers in the fiscal year, a 3.54% increase from 716 crore in FY25. Passenger revenue also rose to around ₹80,000 crore, marking a 5.96% increase. The growth was particularly high on Vande Bharat routes (high-speed corridors), according to Indian Railway officials.