The war that erupted in the Middle East in February 2026 has sent jet‑fuel prices up by nearly 25 percent. The rupee has slipped 12 percent against the dollar. These shocks have squeezed airlines’ margins.
On Diwali eve, a one‑way ticket from Mumbai to Patna costs ₹23,333, the most expensive domestic flight on record. A similar trip to Dubai costs roughly ₹12,000, according to Paytm Travel.
The Index of Services Production for Air Transport fell 9.6 percent in August 2026, after four consecutive months of contraction. It was 2.8 percent down in May, 6 percent in June, and 8.4 percent in July.
SpiceJet’s domestic passenger traffic plunged 70 percent year‑on‑year in September 2026, dropping from 240,000 to 72,891 passengers. Air India fell 15 percent, and IndiGo 5 percent.
ICRA’s Aviation Outlook projects a net loss of ₹280‑₹300 billion for the sector in FY26, and forecasts losses to reach ₹360‑₹380 billion in FY27 if rupee weakness and fuel costs persist.
With airlines unable to pass all costs to passengers, the Ministry of Civil Aviation may review fare regulations, while industry groups lobby for subsidies to cushion the blow.