The global aviation industry has been adversely impacted by the prolonged West Asia crisis. Numbers released by the International Air Transport Association (IATA) reveal that for April 2026, total demand, measured in revenue passenger kilometres (RPK), was down by 3.4 per cent compared to April 2025.
Total capacity, measured in available seat kilometres (ASK), decreased by 2.9 per cent year- on-year. The load factor was 83.1 per cent, down 0.4 percentage points compared to April 2025. This decline in demand was driven mainly by falling demand for carriers in the West Asian region (down 46.6 per cent), which dragged the overall demand down by 3.4 per cent. Resultantly, the air transportation scenario remains feeble.
In April 2026, the price of jet fuel more than doubled, driving up airfares. Globally, the aviation sector is handling twin challenges, viz., rising jet fuel prices and declining demand.
All key variables for the global airline industry have taken a hit due to this crisis. Be it aircraft flown (in absolute numbers or in terms of hours), passengers flown (in absolute numbers or in terms of km flown), available seat km, or total cargo carried, all have witnessed a decline in their performance as compared to the previous year (period of analysis spans from March 2025 to March 2026) as per CMIE data.
The ongoing conflict has had some troubling rumblings for the Indian aviation sector as well. It has cost the country’s airline industry several thousand crores of rupees as major carriers like Air India and IndiGo heavily slash their domestic and international capacities, thanks to soaring jet fuel costs and concomitant loss of profitability.
In addition, the country saw its revenue passenger kilometres (RPK) drop by 2.9 per cent, on a year-on-year basis, as per the IATA data for April 2026. The passenger load factor (PLF) was also disappointing, with a decline of 4.3 percentage points as per the latest available figures released by the IATA for April this year.
All in all, the war has been wreaking havoc with the plans and budgets of the country’s major carriers amidst rising operational costs, contraction in international air demand, and heavy flight cancellations and delays. Indian carriers have suffered major revenue losses, ceding significant international market shares to their foreign competitors.
Indian aviation sector: a snapshot
As per informed estimates, the Indian aviation industry is a key contributor to India’s economy, contributing approximately 1.5 per cent to the country’s GDP. It generates 7.7 million jobs across aviation and allied sectors, such as logistics and hospitality.
India is expected to overtake China and the United States to become the world’s third-largest air passenger market by 2030, according to the International Air Transport Association (IATA) data.
The rising demand has also accelerated fleet expansion, with the number of aeroplanes projected to reach 1,100 by 2027. To accommodate rising freight and passenger traffic, the Government of India is expanding aviation infrastructure.
The country’s airport network has grown from 74 airports in 2014 to 163 airports in 2025, more than doubling in a decade. The Government also aims to increase this network to 350-400 airports by the year 2047. As this sector has crucial socio-economic interlinkages with related industries such as the economically important tourism and hospitality sectors, it becomes vital for the overall domestic economy.
Key implications of the West Asia crisis
Key implications of the West Asia crisis for the country’s aviation sector highlight structural and operational underpinnings.
First, there are surging jet fuel costs and financial strain on the airline industry.
Aviation Turbine Fuel (ATF) accounts for roughly 40 to 60 per cent of any airline’s operational expenses. As the ongoing crisis in West Asia has disrupted crude oil supply chains, particularly due to the Hormuz crisis, the same has caused ATF prices to skyrocket for domestic and international flight operations, leading to a squeeze on the carriers’ bottom-line profitability. This has prompted the airlines to introduce emergency fuel surcharges to mitigate any adverse fallout.
Second, several air carriers are drastically trimming their capacities and networks across both domestic and international routes. The Gulf region is the single largest international market for several Indian carriers.
Due to airspace restrictions and airport dislocations, Indian airlines have been forced to scale down their Gulf operations significantly. Noteworthy examples include operations by Air India and IndiGo, which have trimmed their operations to destinations like Doha, Kuwait and Bahrain. Domestically, the crisis has forced rationalisation of some domestic routes too, so as to manage cash losses, with Air India and IndiGo reducing several daily domestic flights across regional and metro hubs.
Third, the crisis has led to longer travel times for long-haul flights as airspace closures across restricted countries of the likes of Israel, Jordan, Kuwait, and the UAE forced Indian carriers to reroute their North American and European-bound flights. However, such detours have further added to the financial woes of the domestic carriers, for taking longer flight paths to avoid conflict zones significantly increases fuel burn and hence, forces the airlines to temporarily stretch crew availability and pay higher war-risk insurance premiums, as well as shell out extra money on jet fuel.
There is also a related trend. Due to the soaring ticket prices, many Indian travellers are shifting their vacation plans from traditional Europe/US to nearby international destinations.
Fourth, the crisis has also caused a drop in the market shares for the domestic carriers as they cede space to more competitive foreign carriers. This is owing to the fact that while Indian carriers suffered thousands of flight cancellations due to regional exposure and logistical complexities, foreign airlines flying to India were somewhat less impacted.
Foreign network carriers aggressively increased their India capacity—adding hundreds of flights—which allowed these overseas carriers to snap up critical market share on key international segments.
Fifth, there is also a downturn in inbound and outbound tourism as the travel ecosystem has taken a hit with fewer available flights, surging ticket prices, and geopolitical anxieties. This has caused a perceptible decline in inbound and outbound tourist traffic, dealing a heavy blow to hospitality, restaurant, and hotel sectors.
Last, the current crisis has even forced the indigenous carriers to scale back on their expansion plans. Faced with unviable long-haul routes and decreased demand, Indian airlines are forced into fleet rationalisation, deferring pilot hiring, and storing or deferring incoming aircraft deliveries. It puts a question mark over the future profitability of these carriers.
Challenges aside, the Government could continue focusing on the measures to contain the negative fallout of this crisis on domestic carriers. India has actively ensured fuel price stabilisation through an active management of price shocks via targeted tax relief, reduction in customs duties on critical petrochemicals and lowering taxes on ATF to keep domestic airfares stable.
The Directorate General of Civil Aviation (DGCA) also actively promoted operational flexibility so as to temporarily adjust crew duty time norms to manage the fatigue of extended or rerouted flight paths. Major Indian airports have maintained operational alerts to manage sudden diversions, unscheduled landings, and crew logistics.
The Ministry of Civil Aviation coordinates directly with the Ministry of External Affairs and the Indian Navy to quickly facilitate passenger safety, crew accommodations, and emergency operations, in case any such need arises. This has brought strategic inter-agency coordination to the limelight. Several economic buffer methods may also be adopted to protect air carriers and airport operators from long-term financial strain.
No one is sure when this crisis will be resolved and how soon normalcy will return.
One thing is certain: it is a temporary phase, and it too shall pass. While the government and the stakeholders are having a constant watch on the evolving situation, the need of the hour is to have a reality check by the airline operators. If their international operations are being curtailed, scope for recalibration on deployment along domestic routes may be explored, if demand grows. India’s domestic sector too is a big market, and except during the period of lean season, when educational institutes reopen, and monsoon arrives, the sector always experiences regular business and leisure travellers domestically. The lean season gives operators an opportunity to go for heavy fleet maintenance and welfare measures for their staff, such as health check-ups, including mental health check-ups and refresher courses. These measures are not expenditure but an investment for the post-crisis comeback so that upon their return during full operations, they are able to welcome all aboard with renewed confidence and vigour.
The author is Assistant Professor (Economics and Trade Policy), Indian Institute of Foreign Trade, New Delhi.
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
