India’s Domestic Aviation Slowdown Keeps Capacity and Cost Pressures in Focus

India’s domestic passenger traffic reached approximately 167.74 million in FY2026, growing only 1.4%, according to ICRA. March 2026 traffic stood at 14.68 million, up 1% year-on-year, while the estimated passenger load factor reached 89.5% for that month.

The figures point to modest growth alongside high aircraft utilisation. ICRA’s August 2026 update forecast domestic traffic growth of 3–6% for FY2027, citing higher airfares, elevated fuel costs and the impact of the West Asia conflict. Aircraft groundings, engine issues and maintenance delays continue to constrain available capacity.

B2B impact: Corporate travel desks and MICE planners should pay close attention to inventory on high-demand routes. Strong load factors can limit flexibility even when overall traffic growth slows. Agents need realistic fare assumptions, early group planning and alternatives for clients travelling during busy periods.

Source check: FY2026 traffic figures · FY2027 outlook.

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Featured image: AI-generated representative illustration.