Why airlines are cutting capacity across India's busiest airports and routes

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India's domestic passenger traffic grew just 1.33% in FY26, slowest pace since the pandemic recovery began. (HT)

Summary

Rising fuel costs, West Asia disruptions and weak demand are forcing airlines to trim capacity across major airports and routes, marking a sharp slowdown in India's post-pandemic aviation growth.

India's aviation boom is losing altitude.

Capacity across several of the country's busiest airports and air routes weakened between April and June as airlines flew fewer planes amid rising costs and operational disruptions linked to the war in West Asia, weighing on a market that had enjoyed years of strong post-pandemic growth.

The slowdown is visible not just in passenger traffic but also in airline schedules, signalling a broader industry recalibration as carriers grapple with higher fuel costs, airspace restrictions, grounded aircraft and geopolitical uncertainty. Analysts say the cuts reflect supply-side pressures more than a collapse in demand.

For consumers, the capacity cuts are translating into higher airfares across both domestic and international routes. Analysts said airlines have been able to pass on a part of the higher operating costs through fuel surcharges and fare increases, even as passenger demand remains relatively stable.

Airport slowdown

Available seat capacity across five of the country's nine busiest airports declined during the first quarter of FY27 from a year earlier, according to data from UK-based aviation analytics firm OAG, reviewed by Mint.

OAG measures capacity in terms of available seats on sale across domestic and international routes.

Hyderabad recorded the sharpest drop, with capacity falling 12% year-on-year to 3.57 million seats, followed by Chennai, where capacity declined 8% to 2.48 million seats. Ahmedabad, Mumbai, and Kolkata saw declines of about 2-3% each. Capacity growth was largely flat at Guwahati and Bengaluru, while Delhi and Pune bucked the trend with growth of 9.6% and 6%, respectively.

The impact is also visible on key domestic corridors.

OAG data shows capacity on eight of the country's busiest metro-to-metro and metro-to-trunk routes declined 12% sequentially in June to 2.694 million seats available so far, from 3.049 million seats in May.

Among the major corridors witnessing fewer flights are Mumbai-Delhi— the country's busiest air route, Bengaluru-Delhi, Bengaluru-Mumbai, Delhi-Hyderabad, Kolkata-Delhi, Delhi-Pune, Mumbai-Chennai, Ahmedabad-Delhi and Delhi-Chennai.

GMR Airports has already signalled "two quarters of pain", with CFO Saurabh Chawla telling Mint that passenger traffic could remain largely flat in the first half of FY27 before improving later in the year.

“Airlines are anticipating low passenger volumes in run up to Q2 (July-September) leading to aircraft groundings and selective capacity rationalization,” said Sabri Hazarika, senior research analyst at brokerage firm Emkay Global Financial Services.

“FY27 is increasingly shaping up as a yield-led rather than volume-led year, with passenger traffic growth likely to remain relatively stable but pricing remaining healthy,” Hazarika said adding that fare increases may moderate as capacity gradually returns.

Cost pressures mount

"Leading domestic carriers including IndiGo and Air India have indicated capacity moderation in response to (a) sharp rise in aviation turbine fuel (ATF) on domestic routes during June-August 2026,” Supriyo Banerjee, senior vice president and co-group head, corporate ratings, Icra Ltd said.

As per the International Air Transport Association (IATA)’s jet fuel price montor, the global average prices have increased over 52% between 20 February and 5 June, rising to $146.25/barrel.

“This rationalization of capacity, along with higher fares, signals a period of supply-side constraints driven by cost pressures rather than strong demand constraints," he added.

India, the world's fastest-growing aviation market, has been hit by a series of black swan events over the past 12 months. Airlines first had to contend with longer flying times and higher operating costs following the closure of Pakistani airspace in April 2025. They were subsequently hit by rising jet fuel prices and operational uncertainty triggered by the war in West Asia from late February onwards.

India's domestic passenger traffic grew just 1.33% in FY26, slowest pace since the pandemic recovery began.

Data from the Directorate General of Civil Aviation (DGCA) show domestic airlines carried just over 13.8 million passengers in April, down 4.2% from 14.4 million in March and 3.5% lower than the 14.3 million passengers flown a year earlier.

"Domestic air passenger traffic grew modestly in FY2026, with signs of weakening momentum in recent months, reflected in a year-on-year decline in March and April," said Kinjal Shah, senior vice-president and co-group head, corporate sector ratings, at ratings agency Icra Ltd.

According to her, international passenger traffic of Indian carriers recorded moderate growth of 3.9% in FY2026, but was significantly affected in March and April 2026 by geopolitical disruptions and airspace constraints.

“This led to a year-on-year decline of 36% in March and 39% in April 2026,” Shah said.

Airlines pull back

The airline response has become more pronounced in recent months.

India's largest airline, IndiGo, said in its investor presentation released on Monday that it expects only single-digit capacity growth this year, reflecting the pressures faced by the aviation sector.

IndiGo—which reported a loss of ₹2,394 crore—trimmed some international operations in January and February but made no major cuts between April and June. The airline has indicated that it plans to restore capacity to the war-affected West Asia in the coming days.

Nearly two-thirds, or more than 100 of its 153 daily flights to West Asia and Europe, were back in operation in May, the company's management said during its post-results investor call on 29 May.

Rival Air India, grappling with losses of nearly $3 billion (around ₹26,000 crore), has cut services on both domestic and international routes since March as it seeks to align capacity with demand and manage costs. The cuts span both Air India and its low-cost subsidiary, Air India Express.

According to OAG data, Air India and Air India Express made some of the steepest cuts in June, operating 27% and 17% fewer flights, respectively, than a year earlier.

IndiGo, by contrast, increased capacity by 1.3% during the same period, although its planned route reductions will come into effect from end-July. For context, air travel typically slows between mid-June and September in India.

Akasa Air expanded capacity the fastest, increasing it by 12%, while SpiceJet's capacity was down 7.8% from June last year.

IndiGo, Air India, Air India Express, Akasa Air and SpiceJet did not respond to Mint's queries till the time of publication.

About the Author

Abhishek Law

Abhishek Law has spent 18 years in journalism, which in news industry terms means he has survived several newsroom restructurings, countless “urgent” press releases, and more cups of tea than he can reasonably count. Based in New Delhi, he covers aviation for Mint, a sector where aircraft, oil prices, geopolitics and airline CEOs regularly conspire to make his life interesting. Most of his time gets occupied by translating airline jargon like ASKs, yields, load factors and fleet strategies into language that doesn’t require a pilot’s licence. His motto is simple: if readers need a glossary, he hasn’t done his job properly. On most days, the quadragenarian is tracking airline strategies, policy changes and the occasional mid-air disruption that suddenly become a stock market story. When planes are behaving themselves (which is not very often nowadays), he strays into other corporate beats like steel, trying to figure out what’s really happening. He loves to talk, especially ask—that one more question which people are uncomfortable with, and saving contacts in his phone as a "Source who may or may not pick up calls”. But, on a serious note, the goal remains simple: cut through jargon, find that additional detail, and turn complicated business stories into something one can actually enjoy reading.

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