Why is IndiGo’s market share set for further consolidation?

Air India’s decision on the curtailment of its domestic network is likely to further consolidate IndiGo’s market in the country, according to analysts.

Air India announced 22% curtailment of its domestic operations due to high aviation fuel prices, while there are reports that IndiGo is likely to reduce domestic operations by 7%.

Gagan Dixit, researcher of aviation, chemicals, oil & gas sectors at Elara Securities, says the reduction in operations by Air India is expected to consolidate IndiGo’s market even more.

“IndiGo’s nearly 50% international departures were linked to the Middle East. So, there is a sudden impact. But, they have routed most of the international capacity to the domestic market or other destinations in Asia. So, this 50% might actually be less than 20%,” says Dixit.

Air India has decided to cut flights from June 1 onwards till the end of August on metro sectors, which are high-demand and high-fare destinations. The decision was also based on the tapering of international connections, which acted as a feed for domestic sectors.  

He says higher ATF prices have been partly taken care of by an increase in airfares.

“On the domestic side, there is no ATF hike, but airfares have increased. Domestic airfares, which have jumped by 13-15% in the past two months, will remain high for the whole of 2026 if the war continues,” he says.

Dixit adds that the summer schedule has been cut, and this is the first time after COVID that the capacity is declining. Before the start of the summer schedule, the Ministry of Civil Aviation (MoCA) had lifted the airfare cap that was in place after the IndiGo December 2025 operational meltdown.