India’s aviation sector is entering a busy phase as passenger numbers are rising and fuel costs are climbing again. Jefferies, in its latest monthly review, said domestic traffic recovered in October after a weak September and likely improved further in November. The firm noted that the sector is still working through high ATF prices, limited spare capacity and long aircraft delivery queues, all of which influence airline planning for the next few quarters.
Against this background, Jefferies said the major players are taking very different paths. IndiGo is spending more on aircraft ownership and maintenance work in India, Air India is waiting for most of its large orders that will arrive only in 2027 and 2028, and Adani Enterprises has entered pilot training through a sizeable acquisition. These developments sit alongside rising fuel costs, which make cost control more important even as travel demand picks up.
Jefferies on Aviation sector: Traffic and market share
IndiGo’s domestic passenger growth rose to 6% in October from 1% in the previous quarter. Its market share reached 65.6%, the highest in its history. Air India Group saw a 7% decline in domestic passengers in October, compared to a 10% fall earlier, which took its market share to 25.7%.
Akasa held steady at 5.2% and SpiceJet improved to 2.6%. IndiGo’s occupancy moved to 82.4% in October from 81.5% in September. Jefferies said this may have moved toward 88% to 90% in November. Air India’s occupancy dropped to 77.3% from 79.4%. Total traffic in October came close to 14 million passengers.
Jefferies on IndiGo’s $820 million move
Jefferies has kept IndiGo on a Buy call with a target of Rs 7,025, which points to an upside of about 25%.
IndiGo is investing $820 million in IndiGo IFSC, its leasing and finance subsidiary. Jefferies said the money will be used to buy aircraft and engines so the airline can own a larger share of its fleet over time. IndiGo aims for 30% to 40% of its aircraft to be owned or finance leased by 2030, compared to about 18% today.
The airline is also investing more than Rs 1,100 crore in a maintenance facility in Bengaluru. This will allow more servicing to be done within India. IndiGo received seven aircraft from Airbus in October, taking its total for the year to 38. Jefferies said the airline expects early-teen growth in capacity through new arrivals, better utilisation and the return of grounded aircraft.
IndiGo completed most of the A320 software and hardware updates required after Airbus issued an advisory linked to solar radiation. With nearly 200 A320 family aircraft, it needed to finish these upgrades quickly to avoid further disruption.
Jefferies on Air India’s delayed expansion
Air India continues to wait for new aircraft. Jefferies said the airline has 570 aircraft on order, and 524 of these are still pending. Most will come only in 2027 and 2028. The long timeline limits Air India’s ability to grow or reduce unit costs.
About 81% of Air India’s narrow-body aircraft have been upgraded. The remaining 17 aircraft, which were planned for retirement, will now be refurbished in 2026 because of delays at the manufacturer level. In wide bodies, the airline will add six new aircraft in 2026, including 787-9s and A350-1000s, along with upgrades to older 787-8s.
Two 787-8s are being repaired in the United States. Jefferies said about two-thirds of the 787 fleet will have new interiors by the end of 2026. Air India’s domestic traffic fell 7% in October, which means it enters the coming quarters with limited capacity flexibility.
Jefferies on Adani Enterprises and its Rs 8,200 crore training purchase
Adani Enterprises has purchased 72.8% of Flight Simulation Technique Centre for Rs 8,200 crore. Jefferies said this gives Adani control over India’s largest private pilot-training platform. FSTC operates 11 full-flight simulators along with multiple training schools.
With IndiGo and Air India holding large order books, India will need more trained pilots. Jefferies said Adani is now in a strong place to support this demand through training services. It adds to the company’s wider aviation presence, which already includes airports and other support functions.
Jefferies has maintained a buy view on Adani Enterprises with a target of Rs 2,940, suggesting an upside of nearly 33%.
Jefferies on Indian Oil Corporation and fuel supply
Jefferies noted that Indian Oil plays a major role in supplying ATF to airlines, which makes its numbers closely tied to fuel pricing cycles. The brokerage said the company’s earnings remain sensitive to crude swings and marketing margins. Indian Oil’s share price was at Rs 162.45 in the latest trade. Jefferies said steady fuel demand and more stable refining spreads could support results, although pricing policy will remain an important factor. Jefferies has placed Indian Oil on a buy rating with a target of Rs 180, implying an upside of close to 11%.
Jefferies on systems updates
Airbus issued a directive for the A320 family after detecting that strong solar radiation could affect certain flight-control signals. Jefferies said about 338 aircraft in India were involved. IndiGo and Air India have completed most updates because they operate large A320 fleets.
Jefferies on fuel costs
Fuel prices have risen again. Jefferies said the average ATF price for December reached Rs 96,000 per kilolitre, up 5% month-on-month and up 5% to 7% year-on-year in the third quarter of FY26. Fuel accounts for 35% to 45% of airline operating expenses. IndiGo has more space to manage the rise. Air India, SpiceJet and Akasa have less room because of smaller fleets and weaker buffers.
Jefferies on regional airline funding
Star Air has raised Rs 150 crore out of its planned Rs 350 crore Series B round. Jefferies said the money will support new routes, non-scheduled flights and the expansion of in-house maintenance. The airline wants to reach 50 aircraft by 2030.
