For travellers hoping to fly during the festive and winter season, the usual rule of booking early to get a better deal is becoming less reliable. Airfares are high, airline capacity remains constrained on some routes, and travel companies are seeing fewer bookings and enquiries than they normally would at this time of the year.

The impact is beginning to show up in India’s passenger traffic numbers.

Domestic passenger traffic fell 6.3% year-on-year in August, following a 4.8% decline in July and a 1% fall in June, according to Directorate General of Civil Aviation (DGCA) data compiled by ICRA.

The contraction comes just as airlines enter the October-December period when travel demand typically strengthens.

The slowdown is a sharp reversal from the growth India’s aviation market has become accustomed to.

Domestic passenger traffic grew 8.3% in 2023, 6.1% in 2024 and 3.5% in 2025. In the first eight months of 2026, traffic is now marginally below the corresponding period last year.

But this is not simply a story of Indians travelling less.

Airlines have been operating with tighter capacity, while higher aviation turbine fuel (ATF) prices have pushed up fares. Travellers are responding by waiting longer to book, cutting back on discretionary trips or, on some shorter routes, switching to trains.

“Demand is not the problem,” said Gaurav Patwari, chief business officer at Cleartrip. The roughly 6% decline in domestic travel in August was primarily a supply-side issue, he said, with reduced airline seat capacity and higher fares making travellers more deliberate about when and whether to book.

That leaves India's airlines facing a difficult winter test. There may still be demand for travel, but converting that demand into passenger growth will depend on how many seats airlines put into the market, and at what price.

Aviation’s Growth Engine Is Losing Momentum

The decline in August is the latest point in the slowdown in India's domestic aviation market.

The recent monthly numbers are more telling than the year-to-date figure. Domestic airlines carried 134.6 lakh passengers in June, 120 lakh in July and 121.3 lakh in August, with the year-on-year decline widening each month.

In April-August 2026, domestic traffic fell to 667.9 lakh passengers from 674.9 lakh in the same period last year, a decline of 1.1%, according to ICRA.

ICRA expects domestic passenger traffic to grow 3%-6% in FY27. But with the market already down in the first five months, traffic would need to accelerate materially during the remaining seven months to reach even the lower end of that forecast.

“That looks quite optimistic as of now,” said Kinjal Shah, senior vice president at ICRA.

Shah said ICRA was retaining its forecast for now because the industry is heading into a period where favourable base effects could support year-on-year growth.

December last year was affected by significant operational disruptions, while February and March also saw disruption following the escalation of the West Asia conflict.

The resulting lower base could make the year-on-year numbers look stronger later in FY27 even if the underlying recovery remains modest.

Higher Fares, Tighter Capacity Squeeze Travel

The weakness in domestic aviation is coming against a backdrop of higher costs and greater uncertainty around travel.

The escalation of the West Asia conflict has affected travel sentiment and contributed to higher fuel and commodity costs, while broader inflation has put pressure on discretionary spending. Business travellers can also be affected as companies look to control travel expenses, while leisure travellers have more flexibility to postpone or alter trips.

ATF prices have risen sharply in recent months. ICRA estimates that ATF prices rose 33.4% year-on-year in September 2026 and 24.7% in August. Airlines have raised fares, but the extent to which carriers can pass the higher fuel bill on to passengers remains limited by price sensitivity.

The result is beginning to show up in booking behaviour.

“We are not expecting much from this winter season,” said a travel agent at a Gurugram-based travel company. “Our phones are usually flooded with inquiries during this time of the year, but this time we barely have any enquiries.”

A Mumbai-based travel agency said its bookings had fallen 20%-30% this year compared with last year, while advance bookings had also become more expensive. The agency cited a Vietnam flight post Diwali that cost about Rs 65,000 in August, had risen to around Rs 90,000 by the end of September.

The travel agency also pointed to a more complicated factor emerging in Mumbai: the shift of some operations to Navi Mumbai International Airport.

It said fares from NMIA could be cheaper on some routes — citing a Mumbai-Bengaluru example where it found fares of around Rs 4,500 from NMIA compared with Rs 8,500-Rs 10,000 from Mumbai's existing airport — but the longer journey to the new airport could deter some passengers.

The agency also linked higher fares to fuel surcharges, which it attributed partly to the increase in fuel costs following the West Asia conflict.

The recent fall in passenger numbers therefore cannot be read simply as Indians losing their appetite for air travel.

Cleartrip's Patwari said the company had seen bookings pick up in the 10-15 days before its response, suggesting that travellers continued to want to travel but were becoming more price-conscious.

Cleartrip was also seeing some substitution towards premium trains on shorter routes as airfares increased.

ICRA similarly sees substitution as one factor behind the decline, with some passengers moving towards cheaper rail options, including faster services such as Vande Bharat. Others may simply be reducing the number of discretionary trips they take each year.

At the same time, capacity is becoming an equally important factor in determining passenger numbers.

The more important question for airlines is therefore how much capacity will be available during the winter schedule.

Airlines routinely move aircraft between routes depending on expected demand and profitability, Shah said. Where demand is weaker, carriers can consolidate flights, use smaller aircraft or increase load factors rather than maintain existing frequencies.

That could result in a two-speed domestic market during the winter, with airlines concentrating capacity on routes and destinations where demand is strongest while smaller regional markets see thinner connectivity.

“Capacity cuts had already affected regional connectivity and were also affecting leisure destinations dependent on smaller airports,” Patwari added.

West Asia Adds Another Layer Of Uncertainty

The West Asia conflict is also complicating the outlook beyond its impact on fuel prices.

“The conflict had created a degree of fear and uncertainty around travel, while the broader increase in commodity and fuel prices was feeding into inflation,” Shah said.

For airlines, that raises operating costs. For passengers, it raises the price of travel at a time when household budgets are already under pressure.

The impact is not necessarily limited to people travelling to the region. Higher fuel costs can feed into fares across domestic routes, while uncertainty can affect discretionary travel decisions more broadly.

At the same time, international travel has not disappeared as an alternative.

“International demand remained healthy, with Southeast Asia among our faster-growing regions, including Vietnam, Indonesia, the Philippines and Thailand,” Patwari said.

But the company's domestic-to-international travel mix has remained broadly stable at around 60:40, suggesting there has not been a wholesale shift from domestic to international travel.

Winter Demand Is The Real Test

October-December remains the industry's best opportunity to reverse the recent decline.

“We expect the festive season to generate genuine demand and consumer sentiment could improve if seat capacity increases and fares become more rational,” Patwari said.

But stronger demand does not necessarily mean cheaper tickets.

ICRA expects airlines to raise fares when demand strengthens, particularly with ATF prices significantly higher than a year earlier. That creates a difficult balance for carriers: airlines need passenger volumes to improve profitability, but stronger demand gives them greater scope to raise fares, potentially limiting the extent of the volume recovery.

A Recovery May Still Not Fix Finances

Even a stronger festive season may not be enough to repair the industry's financial position if passenger growth falls short of expectations.

ICRA has projected an industry net loss of roughly Rs 36,000-38,000 crore for FY27, based on its assumption that domestic passenger traffic will grow 3%-6%.

If traffic growth falls below that range, the industry's losses could be higher.

The forecast therefore already assumes that the remaining seven months of FY27 will be materially stronger than the first five.

The winter season will show whether that recovery is beginning to take shape — or whether India's domestic aviation market has entered a more prolonged period of slower growth, high fares and tighter capacity.

For airlines, the question is no longer simply whether Indians want to fly.

It is whether they can afford to — and whether there will be enough seats available when they do.