Will Indian airlines further cut capacity to West Asia?
Amid the re-escalation of conflict, the European aviation body has reinstated flight warnings for carriers. Indian airlines have been the worst hit
- Jul 15, 2026,
- Updated Jul 15, 2026 3:11 PM IST
United Arab Emirates remains the busiest international market from India, despite a 6% reduction in capacity to 1.1 million seats, representing 14% of the market this month, which is nearly half compared to the last month.
The escalation of the conflict in West Asia following the exchange of fire between the US and Iran has raised concerns among aviation players.
The European Union Aviation Safety Agency (EASA) on Tuesday reinstated and toughened its warning to airlines operating in the West Asia, telling them to avoid the airspace of Bahrain, Kuwait, Qatar, the United Arab Emirates, and over the Gulf of Oman as the US-Iran war flared up again.
Don't Miss: Flight Insider : How Pilots and Crew Speak in Hidden Jargon Above You
Indian airlines have been the worst hit due to the West Asia crisis, with Air India, Indigo, SpiceJet, and Akasa cutting capacity. Air India Express and SpiceJet have over 80% of their capacity deployed to the Gulf.
“Capacity has contracted most again in Kerala, by 27%, followed by Goa, Tamil Nadu and Telangana by 14.9%, 14.2% and 12.5% respectively this month compared to July 25. These markets continue to be impacted by a drop in migrant worker traffic to West Asia,” said aviation analytics firm OAG.
In view of the financial stress faced by airlines due to the sharp increase in ATF prices, compounded by airspace closures and reduced operations, particularly on international routes, leading to lower aircraft utilisation and liquidity constraints, the government in May this year approved the Emergency Credit Line Guarantee Scheme 5.0 to provide targeted credit support to Indian airlines.
Must Watch: Aviation Boost: ATF Prices Cut By ₹5/Litre, IndiGo Introduces New Budget-Friendly Light Fare!
For the aviation sector, the scheme has specifically earmarked ₹5,000 crore for airlines. The scheme provides structured financial relief with a maximum loan limit of ₹1,000 crore per borrower and an additional ₹500 crore subject to equivalent equity infusion by the borrower.
The loans will have a tenure of up to 7 years, including a 2-year moratorium on repayment, thereby easing short-term liquidity pressures.
United Arab Emirates remains the busiest international market from India, despite a 6% reduction in capacity to 1.1 million seats, representing 14% of the market this month, which is nearly half compared to the last month.
The escalation of the conflict in West Asia following the exchange of fire between the US and Iran has raised concerns among aviation players.
The European Union Aviation Safety Agency (EASA) on Tuesday reinstated and toughened its warning to airlines operating in the West Asia, telling them to avoid the airspace of Bahrain, Kuwait, Qatar, the United Arab Emirates, and over the Gulf of Oman as the US-Iran war flared up again.
Don't Miss: Flight Insider : How Pilots and Crew Speak in Hidden Jargon Above You
Indian airlines have been the worst hit due to the West Asia crisis, with Air India, Indigo, SpiceJet, and Akasa cutting capacity. Air India Express and SpiceJet have over 80% of their capacity deployed to the Gulf.
“Capacity has contracted most again in Kerala, by 27%, followed by Goa, Tamil Nadu and Telangana by 14.9%, 14.2% and 12.5% respectively this month compared to July 25. These markets continue to be impacted by a drop in migrant worker traffic to West Asia,” said aviation analytics firm OAG.
In view of the financial stress faced by airlines due to the sharp increase in ATF prices, compounded by airspace closures and reduced operations, particularly on international routes, leading to lower aircraft utilisation and liquidity constraints, the government in May this year approved the Emergency Credit Line Guarantee Scheme 5.0 to provide targeted credit support to Indian airlines.
Must Watch: Aviation Boost: ATF Prices Cut By ₹5/Litre, IndiGo Introduces New Budget-Friendly Light Fare!
For the aviation sector, the scheme has specifically earmarked ₹5,000 crore for airlines. The scheme provides structured financial relief with a maximum loan limit of ₹1,000 crore per borrower and an additional ₹500 crore subject to equivalent equity infusion by the borrower.
The loans will have a tenure of up to 7 years, including a 2-year moratorium on repayment, thereby easing short-term liquidity pressures.