Indian Airlines Cut Diwali Capacity for the First Time Since 2020 Amid Rising Costs

India’s aviation sector has recorded a decline in festive-season capacity for the first time since the pandemic-induced slowdown in 2020. Data from aviation analytics firm Cirium shows that airlines scheduled roughly 6% fewer flights across October and November compared to a year earlier.

The reduction in routes and flights coincides with a broader strain on the domestic aviation market. Domestic passenger traffic declined by 6.5% in September. Meanwhile, capacity constraints have pushed festive-season fares significantly higher, with some routes seeing one-way ticket prices match the cost of round-trip journeys from a year ago.

Travelers have reported difficulties in securing affordable tickets despite early bookings. Dinesh Sharma, a 28-year-old marketing professional based in Hyderabad, noted that one-way fares to Siliguri exceeded ₹20,000, which is typically the cost of a round-trip ticket.

Airlines acknowledge the rising cost burden on passengers while pointing to financial pressures. During an earnings call, IndiGo Chief Executive Officer Willie Walsh stated that while demand remained reasonably well-supported, carriers had to balance affordability with financial stability.

IndiGo, the country's largest carrier, reduced its capacity by 1% and carried 4.5% fewer passengers during the quarter ended September. Despite a 34% increase in passenger yields, the airline reported a loss of ₹1,880 crore during the period, driven by a 67% jump in its fuel bill.

Industry experts indicate that mounting operational pressures are forcing carriers to trim schedules. Ajay Prakash, chief executive of Mumbai-based Nomad Travels, explained that Indian carriers are contending with higher fuel prices, a weaker rupee, and extended international flight paths resulting from airspace restrictions. With festive demand colliding with elevated cost structures, airlines are focusing heavily on schedule rationalization and cost management to navigate current market conditions.

"The decision by domestic airlines to cut capacity during the peak festive season highlights the severe margin pressures currently facing the aviation sector. When rising operational costs like fuel prices and currency fluctuations outpace passenger yields, businesses are forced to prioritize survival and financial discipline over volume growth. For the broader business and travel ecosystem, this trend demonstrates how macroeconomic headwinds can directly impact consumer demand and pricing structures in high-cost industries." — Dr. Shishir Gupta, Founder & CEO, StartupLanes