Domestic airfare to rise further amidst Air India, IndiGo capacity cut
After international, ATF hike is set to impact the Air India and IndiGo domestic schedule as they look to cut the capacity owning to growing operational expenses.
- May 27, 2026,
- Updated May 27, 2026 10:46 AM IST
Summer travellers having a last minute travel plan may have to shell out more from their pockets with the Air India and IndiGo cutting down domestic schedule due to high jet fuel price.
The biggest hit of this cut is coming on the metro sector Delhi, Mumbai, Hyderabad, Chennai and Bengaluru. Another reason is reduction in international travellers taking domestic connectivity with trimmed global operations. It will be in place starting June 1 to August 31.
Any reduction in capacity leads to increased demand, adding to airfare. Domestic airfare are already up 15% while international in the range of 35-40%. Air India is cutting 15% capacity while the IndiGo is looking 5-7% cut.
This comes as the airlines have already trimmed the international operations as ATF prices skyrocketed since the Middle East conflict end of February this year.
MUST READ | Air India, IndiGo to cut domestic flights from June 1: Report
A multitude of things seems to be going wrong for the sector. One is rising jet fuel prices. Domestic carriers have also been hit by the rising US dollar against the rupee. Closure of airspace over West Asia and Pakistan is forcing Indian carriers to take a longer route to go west. Adding fuel to the fire is Prime Minister Narendra Modi’s appeal to citizens to reduce international travel.
Impact on International operations
To maintain operations as smooth as possible, domestic carriers are reworking their strategies. They have reduced their summer schedule by around 10%. Air India recently reduced international operations by 25%, or 1,200 flights, impacting 33 routes in four regions. IndiGo – which has a fleet size of 440 of which 80% is leased - –has reportedly cut 12% flights, while SpiceJet is facing its toughest times with unpaid staff dues of over 2.5 months.
DON'T MISS | Why airlines are sending SOS over ATF price surge
The small carrier’s entire international operation has been impacted. Several of its domestic flights had to be cancelled due to ending of aircraft lease bringing down its fleet size from 35 to 21 over the past few weeks. However, if the war continues, the spillover could be visible in the second quarter of the FY27 too, according to analysts.
Kinjal Shah, Senior Vice President & Co-Group Head, Corporate Ratings, ICRA Ltd, says losses are expected to persist amid an adverse cost environment shaped by geopolitical developments. For FY27, ICRA had projected that net losses will narrow to ₹11,000-12,000 crore from ₹17,000-18,000 crore in FY26, supported by growth in passenger traffic.
Air India’s losses more than doubled to ₹26,000 crore in FY26 over the consolidated loss of ₹10,859 crore in FY25, as per Singapore Airlines, which holds a 25.1% stake in the airline.
Summer travellers having a last minute travel plan may have to shell out more from their pockets with the Air India and IndiGo cutting down domestic schedule due to high jet fuel price.
The biggest hit of this cut is coming on the metro sector Delhi, Mumbai, Hyderabad, Chennai and Bengaluru. Another reason is reduction in international travellers taking domestic connectivity with trimmed global operations. It will be in place starting June 1 to August 31.
Any reduction in capacity leads to increased demand, adding to airfare. Domestic airfare are already up 15% while international in the range of 35-40%. Air India is cutting 15% capacity while the IndiGo is looking 5-7% cut.
This comes as the airlines have already trimmed the international operations as ATF prices skyrocketed since the Middle East conflict end of February this year.
MUST READ | Air India, IndiGo to cut domestic flights from June 1: Report
A multitude of things seems to be going wrong for the sector. One is rising jet fuel prices. Domestic carriers have also been hit by the rising US dollar against the rupee. Closure of airspace over West Asia and Pakistan is forcing Indian carriers to take a longer route to go west. Adding fuel to the fire is Prime Minister Narendra Modi’s appeal to citizens to reduce international travel.
Impact on International operations
To maintain operations as smooth as possible, domestic carriers are reworking their strategies. They have reduced their summer schedule by around 10%. Air India recently reduced international operations by 25%, or 1,200 flights, impacting 33 routes in four regions. IndiGo – which has a fleet size of 440 of which 80% is leased - –has reportedly cut 12% flights, while SpiceJet is facing its toughest times with unpaid staff dues of over 2.5 months.
DON'T MISS | Why airlines are sending SOS over ATF price surge
The small carrier’s entire international operation has been impacted. Several of its domestic flights had to be cancelled due to ending of aircraft lease bringing down its fleet size from 35 to 21 over the past few weeks. However, if the war continues, the spillover could be visible in the second quarter of the FY27 too, according to analysts.
Kinjal Shah, Senior Vice President & Co-Group Head, Corporate Ratings, ICRA Ltd, says losses are expected to persist amid an adverse cost environment shaped by geopolitical developments. For FY27, ICRA had projected that net losses will narrow to ₹11,000-12,000 crore from ₹17,000-18,000 crore in FY26, supported by growth in passenger traffic.
Air India’s losses more than doubled to ₹26,000 crore in FY26 over the consolidated loss of ₹10,859 crore in FY25, as per Singapore Airlines, which holds a 25.1% stake in the airline.