The domestic aviation sector saw passenger growth virtually stall in the first four months of 2026, signalling that the post-pandemic travel boom may be losing momentum amid softer discretionary demand, elevated airfares and persistent operational disruptions.
Domestic airlines carried 57.55 million passengers during January-April 2026, up just 0.06% from 57.51 million a year earlier, according to industry data. The growth was sharply lower than the 9.87% expansion recorded in the corresponding period of 2025 and marks the weakest performance since the industry emerged from the pandemic-induced downturn.
The weakness became particularly visible in April, when domestic passenger traffic fell 3.47% year-on-year to 13.82 million passengers from 14.32 million. Traffic was also 4.2% lower than the 14.4 million passengers carried in March, highlighting a moderation in travel demand.
The slowdown comes at a time when airlines are grappling with rising operating costs, aircraft shortages and geopolitical uncertainties. Rating agency Icra has revised its outlook on the aviation sector to negative, citing sustained disruptions that could weigh on passenger traffic growth in FY27.
Kinjal Shah, senior vice-president and co-group head, corporate ratings, Icra, said the January-April deceleration was largely influenced by the decline in April traffic amid higher airfares, operational disruptions and geopolitical uncertainties.
“The domestic air passenger traffic growth during April-December, FY26, also remained subdued at around 1.3%, compared to much stronger growth in the previous year, indicating that the slowdown has been building over the past few quarters,” Shah said.
Rising Costs
Industry executives attributed the moderation to softer discretionary spending as households grapple with higher expenditure on fuel and essential items, limiting travel budgets. Elevated fares have also weighed on demand, even as airlines continue to face cost pressures from high aviation turbine fuel prices and a weaker rupee, which has increased aircraft lease and maintenance expenses.
Signs of weakening demand were also visible in passenger load factors during April. Air India Group’s load factor fell to 78.5% from 82.3% in March, while IndiGo’s declined to 82.7% from 83.5%. SpiceJet reported a drop to 80.7% from 82.8%.
Supply-Side Bottlenecks
Supply-side challenges continue to persist. More than 100 aircraft, accounting for an estimated 11-15% of the domestic fleet, remain grounded because of engine-related issues and maintenance bottlenecks, including Pratt & Whitney engine failures.
Airlines have also begun trimming capacity in response to rising costs and operational disruptions. Air India has reduced domestic operations by 20-22% and international services by 27%, while IndiGo expects a 10-13% sequential decline in domestic capacity from June and has scaled back parts of its international network. Industry executives said elevated fuel costs, airspace restrictions and longer flight durations linked to geopolitical tensions in West Asia could continue to weigh on growth prospects in the coming months.