Fewer flights, firmer fares: Why air tickets are not getting any cheaper

With fewer planes flying and steady passenger demand, airfares are likely to stay firm or rise modestly through the festive and winter travel season

If you’ve been hoping for cheaper domestic flights this festive season, you may have to wait a little longer. Despite lower crude oil prices and improving aircraft availability, airfares are likely to stay firm as airlines cut back on overall capacity.  Meanwhile, the DGCA has stepped in, urging carriers to add flights during the festive travel rush to prevent fare spikes and protect consumers.

 

According to a report by Elara Capital, India’s domestic air traffic fell 3% year-on-year in Q2 FY26, after growing 11% in Q4 FY25. The main reason: a shrinking fleet among non-INDIGO airlines, especially those in the Tata Group (Air India, Vistara, and Air India Express).  That regulatory nudge comes as Tata Group airlines shrink their fleet by 4% to 275 aircraft, even after new plane deliveries,  even though 15 new planes were delivered by Boeing and Airbus. Analysts at Elara Capital say this points to a replacement strategy rather than expansion, as older jets are being phased out instead of new routes being added. To passengers, that translates into higher or steady ticket prices, not the discounts you might’ve expected.

 

 

In contrast, INDIGO’s fleet grew 10% YoY, giving it a clear edge. Nearly half of INDIGO’s domestic capacity is on routes where it competes directly with Tata Group carriers, effectively making India’s skies a duopoly for now.

 

With fewer seats available, airfares have found support. Industry yields — essentially the average ticket price per kilometer — rose about 2% YoY in Q2 FY26. July saw fares dip slightly, but they rebounded in September with an 11% jump as festival-season demand kicked in.

 

What it means for you as a flyer:

 

Airfares won’t drop much in the short term. With capacity tight, airlines don’t need to slash prices to fill seats.

 

Tickets could even rise around festivals or long weekends. The industry’s passenger load factor (PLF) — how full planes are — stayed high at 83%, showing steady demand despite fewer flights.

 

Cheaper oil hasn’t translated to cheaper fares yet. While international crude prices are around USD 65 per barrel, airlines are using the margin to repair balance sheets and cover higher lease costs.

 

 Who’s Benefiting — and why this matters

 

INDIGO is emerging as the big winner. It’s the only airline expanding capacity, with its fleet growing 10% YoY in Q2 FY26. Nearly half its flights operate on duopoly routes, directly competing with Tata Group airlines.

 

With more aircraft returning to service — including those fitted with Pratt & Whitney engines — INDIGO is expected to post a ₹9.6 billion profit in Q2 FY26, compared to a ₹7.5 billion loss a year ago. That’s a 110% jump in EBITDA, helped by stronger ticket prices and higher passenger numbers.

 

"Airfares grew 2% YoY for the industry – weak in July (down 5% YoY) and flat in August but offset by strong growth of 11% YoY in September. International airfares of INDIGO jumped 15% QoQ in Q2FY26, thoughpartially offset by a seasonal drop in domestic airfares by 11% QoQ. INDIGO would continue to benefit from a gradual return of the grounded aircraft (P&W engine-fitted), which would reduce its aircraft leasing cost," said Gagan Dixit, Aviation, Chemicals, Oil & Gas analyst at Elara Capital.

 

By contrast, SpiceJet’s passenger count fell 16% YoY, and it’s expected to post a ₹3 billion quarterly loss despite reducing costs.  Meanwhile, on Sunday, the Federation of Indian Pilots (FIP) urged the DGCA to thoroughly check and investigate the electrical system of all Boeing 787 aircraft in the country.  On Saturday, a Boeing 787 plane operated by Air India from Amritsar to Birmingham saw the deployment of emergency turbine power when it was about to land in the UK city. The airline said that the crew of the flight said the Ram Air Turbine (RAT) was deployed unexpectedly during the final approach, but the aircraft landed safely.