Indian airlines see international travel rebound despite rising fuel costs: Report

Indian carriers recorded a sequential rise in international passenger traffic in June, while domestic load factors remained strong despite seasonal moderation. However, higher fuel prices and a weaker rupee continue to increase operating costs and may weigh on airline profitability, an Equirus report said.

New Delhi: Indian carriers saw sequential improvement in international travel in June even as airlines faced elevated fuel costs, while domestic passenger load factors remained healthy, a report said on Monday.

The report from financial services firm Equirus said domestic traffic moderated following seasonal highs, passenger load factors remained healthy, reflecting resilient demand and disciplined capacity deployment across the sector.

---

Rising input costs were the key challenge, with Brent crude averaging about $87.3 per barrel in July up 20 per cent both year-on-year and month-on-month and Singapore jet fuel near $155 per barrel up 71 per cent annually.

The rupee weakened to around 95.4 against the dollar, increasing the cost of aircraft leasing, maintenance and other dollar-denominated operating expenses.

Domestic aviation demand remained resilient despite a sequential slowdown. Domestic passenger traffic stood at approximately 13.5 million passengers in June 2026, easing 1 per cent year-on-year and 12 per cent month-on-month, reflecting the seasonal moderation after the peak summer travel period.

Revenue Passenger Kilometres (RPKs) remained broadly unchanged on a year-on-year basis at 13.3 billion, while Available Seat Kilometres (ASKs) eased 2 per cent year-on-year as airlines moderated capacity.

Passenger load factor (PLF) remained healthy at 85.7 per cent, improving 118 basis points year-on-year, indicating that airlines continued to maintain efficient aircraft utilisation despite softer passenger volumes.

Foreign-bound passenger traffic by Indian carriers rose to approximately 2.4 million during June, increasing 4 per cent over May even though it remained below last year’s level.

Flight departures increased 6 per cent month-on-month while capacity remained broadly stable, signalling a gradual restoration of international operations following disruptions in previous months.

The firm said that the airline sector currently presents a mixed operating environment.

“Passenger demand continues to remain healthy, especially in the domestic market where load factors remain robust despite seasonal moderation,” it added.

Meanwhile, airlines continue to face pressure from elevated aviation fuel prices and currency depreciation, both of which are likely to influence profitability in the near term, the report forecasted.