Elevated fuel costs and ongoing airspace restrictions led to a sharp decline in Air India Group’s scheduled seat capacity in June, with the airline reducing capacity by nearly 1.48 million seats year-on-year, or 22.5% to 5.11 million seats in June from 6.59 million in June last year.
Air India accounted for the bulk of the decline, with its capacity falling by about 1.02 million seats, or 26.8%, to 2.77 million seats from 3.79 million a year earlier. Air India Express also saw capacity decline by around 0.47 million seats, or 16.6%, to 2.33 million seats, according to UK-based aviation analytics firm OAG.
The contraction comes even as the domestic aviation market continues to expand, with overall airline capacity rising 5.3% year-on-year in June to 24.53 million seats, up from 23.29 million seats last June.
Market Divergence
While Air India Group scaled back operations, rival carriers expanded. IndiGo increased capacity by 1.3% to 12.29 million seats up from 12.13 million seats, while Akasa Air grew 11.9% to 0.92 million seats from 0.82 million.
The divergence highlights a widening competitive gap, with IndiGo continuing to consolidate market leadership through incremental expansion, while Air India undergoes structural realignment post-privatisation.
Network Rationalization
For Air India, it is a double whammy. The capacity cuts reflect mounting pressure to manage costs amid a challenging operating environment marked by soaring jet fuel prices, a weakening rupee, and softer travel demand, while losses continue to mount. Tata Group-controlled Air India reported a net loss of about Rs 26,800 crore for FY26.
The airline has been rationalising its network to protect margins and improve operational stability.
The reductions follow Air India’s announcement last month that it would rationalise services on several international routes between June and August, citing persistent airspace restrictions over certain regions and record-high jet fuel prices that have affected the commercial viability of some operations.
Domestic flights have also been trimmed as part of the broader adjustment.
Overall, Air India Group has announced capacity reductions through August 2026, including a 22% cut in domestic capacity and a 27% reduction across its international network.
Before these cuts, the airline operated about 4,400 weekly flights, of which 3,600 were domestic and 800 international.
While the reduction in total flights is around 23%, the seat capacity decline is closer to 27%, indicating that deeper cuts in higher-capacity international services are having a disproportionate impact on overall capacity.
International long-haul flights typically use wide-body aircraft such as Boeing 787s and 777s, which carry significantly more seats than narrow-body aircraft used on domestic routes. As a result, even a smaller reduction in international frequencies can disproportionately impact total seat capacity.