India’s domestic passenger traffic is projected to rise to 172–176 million in FY26, marking slower growth despite an increase in aircraft deliveries, ICRA reported. Q1 traffic growth of 4.4% was hit by cross-border tensions, flight disruptions, and safety concerns. A prolonged monsoon and US trade headwinds are also weighing on demand, with passenger yields dipping 4–5% year-on-year.
Airlines added 5% capacity, expanding the fleet to 855 aircraft, with 1,600+ new planes on order. Grounded aircraft have reduced to 15–17% of the fleet, showing operational recovery amid financial pressures.
