India’s Domestic Air Traffic Growth Slows to 1% in March 2026

India’s domestic air traffic growth slows to 1% in March, FY26 rise at 1.4%: ICRA

Domestic Air Traffic Growth in India

India’s domestic air passenger traffic grew by only 1% year-on-year in March 2026. For the entire financial year 2025-26, the growth was 1.4%, reaching 1,677.4 lakh passengers. In March alone, passenger numbers were 146.8 lakh, slightly higher than 145.4 lakh in March 2025 and 140.6 lakh in February 2026.

Compared to February 2026, March saw a 4.4% increase in traffic. However, airline capacity was still 3% lower than in March 2025, though it was 10.6% higher than February 2026.

Challenges Facing the Aviation Sector

The aviation industry is under pressure due to rising costs and external factors. Aviation turbine fuel (ATF) prices increased by 9.2% in April 2026 compared to the previous month and were up 18.2% year-on-year. Fuel costs make up 30-40% of airline operating expenses, making airlines very sensitive to fuel price changes and currency fluctuations.

The Indian rupee has weakened against the US dollar, adding to cost pressures. Geopolitical tensions have also affected international airspace, causing flight cancellations and rerouting, which increase operational costs.

To help airlines, the government cut landing and parking charges by 25% for three months starting April 2026.

International Traffic and Outlook

International passenger traffic for Indian carriers fell 0.3% year-on-year in February 2026 and dropped 16% compared to January 2026. However, from April 2025 to February 2026, international traffic grew by 7.7% to 33.15 million passengers.

Forecasts for FY2027 expect domestic growth of 6-8% and international growth of 8-10%, but these predictions now have a downward bias due to ongoing challenges like flight disruptions and higher fares.

Financial Impact on Airlines

Indian airlines are expected to report net losses of ₹170-180 billion in FY2026, worsened by slower traffic growth, currency losses, and stricter pilot duty rules. For FY2027, net losses could increase beyond the earlier estimate of ₹110-120 billion due to rising costs and operational difficulties linked to the West Asia conflict.

Operational Issues

The sector is also dealing with supply chain problems and engine troubles, especially with Pratt & Whitney engines. About 117 aircraft, or 13-15% of the fleet, were grounded as of February 2026 because of these issues.

Important Facts for Exams

• Domestic air passenger traffic grew by 1% in March 2026 and 1.4% for FY2026.
• ATF prices rose 9.2% in April 2026 month-on-month and 18.2% year-on-year.
• Fuel costs account for 30-40% of airline operating expenses.
• Government reduced landing and parking charges by 25% for three months from April 2026.
• International passenger traffic grew 7.7% from April 2025 to February 2026 but fell in February 2026 compared to previous months.
• Indian airlines expected net losses of ₹170-180 billion in FY2026.
• About 117 aircraft were grounded due to engine issues as of February 2026.