Domestic Air Passenger Traffic Grows 1.4% YoY in FY26

India’s domestic air passenger traffic recorded modest growth in FY26, broadly aligning with rating agency ICRA’s estimates. The recovery remained gradual amid capacity adjustments and cost‑related challenges for airlines.

Domestic travel demand stayed resilient, supported by high passenger load factors. However, international traffic trends and rising fuel costs continued to pose challenges for the aviation sector.

Domestic Passenger Traffic Performance in FY26

India’s domestic air passenger traffic increased 1.4% year‑on‑year to 1,677.4 lakh in FY26, according to ICRA. This growth was within the agency’s estimated range of 0–3% for the year.

In comparison, Indian airlines had carried 1,653.8 lakh domestic passengers in FY25. The data indicates steady but moderate expansion in domestic air travel demand.

March 2026 Traffic and Capacity Trends

For March this year, domestic air passenger traffic rose 1% year‑on‑year to 146.8 lakh. During the month, airlines deployed 3% lower capacity compared to March 2025.

Despite reduced capacity, the industry achieved a higher passenger load factor due to strong demand. ICRA estimated the passenger load factor at 89.5% in March 2026, compared with 86% a year earlier.

International Passenger Traffic Trends

International passenger traffic for Indian carriers showed mixed trends during the period. In February this year, international traffic stood at 28.5 lakh, reflecting a decline of 0.3% year‑on‑year.

The figure also represented a sequential decline of 16% compared with January. For the April‑February period of FY25, international traffic was recorded at 331.5 lakh, marking a growth of 7.7%.

Aviation Fuel Costs and Currency Pressures

Aviation turbine fuel prices announced on April 1, 2026, increased 9.2% sequentially and 18.2% year‑on‑year. ICRA attributed the rise primarily to higher crude oil prices following West Asian geopolitical tensions.

Crude oil prices rose sharply by 45.5% month‑on‑month in March 2026, though the pass‑through to ATF prices was moderated. The continuing weakening of the rupee against the US Dollar remains an additional cost concern for airlines.

Read More: Airlines Reluctant to Shift to Navi Mumbai Airport.

Conclusion

India’s domestic aviation sector recorded stable growth in FY26 despite operating amid capacity constraints and rising operating costs. High passenger load factors helped airlines maximise available capacity during the year.

International traffic trends remained uneven, reflecting both seasonal and global factors. Overall, the data highlights measured recovery and ongoing cost sensitivities within the Indian aviation industry.

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