Industry Odisha Bureau, Aug 24: Indian airfares are rising despite weakening passenger growth across the domestic aviation market. Airlines have reduced flight capacity faster than passenger demand has declined significantly overall. This supply-demand imbalance is keeping remaining aircraft highly utilized despite traffic weakness currently.
Average airfares across India’s 72 domestic sectors rose approximately 20.5 percent between March 2025 and June 2026. The Directorate General of Civil Aviation cited this data in Parliament on July 27. Analysts have estimated a sharper fare increase of approximately 35 percent year-on-year overall. Current ticket prices hover around ₹7,000 to 7,500 versus ₹5,000 to 5,500 one year ago.
Domestic passenger traffic growth has slowed dramatically in 2026 compared with prior years. January through July traffic grew just 0.64 percent year-on-year, marking the slowest pace recently. July 2026 passenger traffic itself declined about 5 percent compared with July 2025 directly.
However, airlines cut capacity at a rate roughly twice the demand decline rate. In July 2025, both demand and capacity declined by approximately 3 percent together. In July 2026, airline capacity fell around 9 percent compared with July 2025.
Individual airlines have implemented departure cuts of varying magnitudes across the industry broadly. SpiceJet reduced July departures by 38 percent year-on-year, the most severe contraction observed. Air India cut departures by 19 percent, while Air India Express fell 18 percent. Akasa Air implemented a 7 percent departure reduction, and IndiGo cut 3 percent.
Total domestic departures fell to 82,258 in July 2026 from 92,066 in July 2024. This represents a decline of nearly 11 percent below the 2024 peak level. Departures had expanded from 74,875 in July 2022 to 92,066 in July 2024.
Despite fewer flights, passenger load factors remain elevated at above 85 percent overall. The load factor reached 85.3 percent in July 2026, up from 70.5 percent 2022. This means roughly 85 of every 100 available seats remain occupied consistently now.
High load factors reduce airline pressure to offer discounts on available ticket inventory. When most seats are filled despite fewer overall flights, fares can remain elevated. Airlines attributed capacity cuts to operational constraints and elevated aviation turbine fuel costs. Longer flying hours due to Pakistan airspace restrictions and West Asia disruptions add costs. Aviation turbine fuel represents 35 to 40 percent of total airline operating expenses directly.
Travel booking platform ixigo reported that higher ticket prices drove growth, not passenger volumes. Domestic transaction value increased 22 percent year-on-year, according to ixigo management commentary overall. International transaction value surged 38 percent, also driven by higher average ticket values. If airlines continue cutting capacity faster than demand declines, fares will likely remain elevated. Whether carriers eventually restore competitive seat availability will help determine passenger fare dynamics forward.
