Indian Aviation Outlook: International Traffic Shows Signs of Recovery as Domestic Demand Slows

New Delhi, August 24, 2026; India’s aviation industry may witness a gradual improvement in international passenger demand in the coming months, even as the domestic market faces a period of moderation, according to an assessment by brokerage firm Equirus.

International operations recorded a sequential improvement during August, with passenger traffic handled by Indian carriers estimated at nearly 2.6 million. International revenue passenger kilometres also increased, indicating stronger demand for overseas travel.

The improvement in passenger demand came despite a comparatively slower increase in available capacity. As a result, the international passenger load factor climbed to about 77.2 per cent, marking an improvement of more than one percentage point from the previous month. However, international traffic remained below the level recorded during the same period last year.

The domestic aviation market presented a different picture. Passenger traffic on domestic routes was estimated at around 12 million in August, representing declines both on a yearly and monthly basis. Revenue passenger kilometres also contracted, while airlines reduced available seat capacity and flight operations.

The weaker demand led to a decline in the domestic passenger load factor to approximately 83.1 per cent from the previous month. Despite the monthly fall, the figure remained marginally above the year-earlier level.

Airlines are also facing increased operating costs. Crude oil prices remained elevated, while aviation turbine fuel prices recorded a sharp annual increase. A weaker Indian rupee has added further pressure because several major airline expenses, including aircraft leasing and maintenance costs, are denominated in US dollars.

The competitive landscape has also continued to evolve. IndiGo increased its share of the domestic market to around 67.2 per cent, while the Air India Group accounted for about 24.2 per cent. Equirus, however, cautioned that short-term changes in market share should not necessarily be viewed as evidence of a lasting shift in competitive strength.

Internationally, the Air India Group increased its share to about 43.2 per cent sequentially, while Akasa Air’s share rose to around 4.2 per cent. The brokerage said airlines are increasingly adjusting where they deploy aircraft, with some carriers maintaining a stronger domestic focus while others expand their international networks.

Equirus said the combination of improving overseas demand, changing airline capacity strategies and persistent cost pressures is likely to influence the direction of India’s aviation industry in the months ahead.