Domestic Air Traffic Falls 2.9% in July 2025, Breaking Last Year’s Growth Trend: DGCA

By Surabhi Gupta

New Delhi: India’s domestic aviation marketplace had shown signs of resilience and consistent expansion throughout the first six months of the year. The month of July 2025 proved to be a setback, however. According to official data released by the Directorate General of Civil Aviation (DGCA), domestic air passenger traffic fell 2.94% year-on-year, to 1.26 crore passengers, compared to 1.29 crore passengers in July 2024. The fall showcases a continued decline from last year, while the industry struggles with many headwinds, from safety concerns to seasonal obstacles.

A Fall Back from Last Year's Momentum

In July 2024, the sector recorded a 9% year-on-year growth, carrying over 131.4 lakh passengers. Moreover, the industry showcased that it was coming back not just from the pandemic after-effect but also from capacity constraints prior to the pandemic, with passenger loads factors at the time at 87%. International traffic soared nearly 49% over the pre-COVID levels, according to ICRA.

However, July 2025 was a different story. Passenger numbers fell, load factors slipped, and capacity utilization fell. On the whole, major carriers fell in load factor feedback, with the Air India group falling from an 81.5% in June to a 78.6%. Industry analysts believe it could be a combination of factors, including the continued safety concerns in the aftermath of the tragic Air India crash, the effect of prolonged monsoons and cautious consumer sentiment.

Domestic Aviation Snapshot – July 2024 vs July 2025

The Shadow Of The Air India Crash

The July slowdown cannot be seen in isolation. It follows the June 12 crash of Air India flight AI-171 on the Ahmedabad–London Gatwick route, which killed 260 people, including nearly all on board and several on the ground.

While air accidents are rare, public confidence has been shaken in this case because of the magnitude of this tragedy and the connection with the national carrier. "We did see higher levels of cancellations and hesitancy around travel involving flights operated by Air India in the weeks following the crash on travel booking platforms. It remains our opinion that travel hesitancy post the aircraft accident tragedy weighed down July demand observations," wrote ICRA, the aviation rating agency.

Despite the general decline, IndiGo expanded its market share to 65.2 per cent in July 2025 from 62 per cent in July 2024 for domestic markets. IndiGo, however, did carry fewer month-on-month total passengers (82.15 lakh in July compared to 87.74 lakh in June). On-time performance remained an impressive 91.4% across six metro airports, which was the best in the industry.

The Air India Group, by contrast, saw its market share slide to 26.2% from 28.8% a year earlier. On a sequential basis, the group also lost ground, partly due to a 5% domestic capacity cut in late June for fleet-wide safety checks. This followed DGCA scrutiny after the June crash.

Other carriers, though small in scale, saw marginal gains. Akasa Air improved its share from 4.7% to 5.5% year-on-year, while SpiceJet contracted to 2% from 3.1%.

Duopoly And Industry Pressures

India's domestic aviation market is essentially a duopoly. IndiGo and Air India, combined, represent over 91% of the market. IndiGo operates over 400 aircraft, while the Air India Group has around 300 aircraft. Volvo and Avatair are new and emerging players, but also seem to be struggling with the delivery of new aircraft, and legacy players like SpiceJet are struggling with liquidity challenges.

According to ICRA, domestic passenger traffic could increase modestly to 17 crore in FY26, which reflects growth of 4-6% over FY25. This is a downgrade from their previous forecast of 7-10% growth, and reflects a slower demand and capacity limitations to add more flights.

Financial Pressure And Rising Costs

Airlines have benefited unevenly from demand recovery, and airlines remain unprofitable. Airlines are still challenged to recoup higher aviation turbine fuel (ATF) costs and infrastructure costs, and yields were weakening. ICRA estimates that the airline sector will have losses of ₹30,000-40,000 crore in FY25, similar to FY24, and improved from the vigorous ₹1.7 lakh crore losses in FY23.

While IndiGo's strong exit passenger mix has limited its financial pressure, it isn't immune. They announced they reported a very sharp quarterly profit drop that was driven by rising costs and weakening load factors. Smaller carriers/airlines and Air India are arguably under more significant strain. Since Tata acquired Air India, we estimate they've reported about ₹28,000 crore in losses. Tata clearly appears to have a challenge with its 'turnaround' strategy.

Expert Voices: Safety And Structural Concerns

Captain C. S. Randhawa, former Deputy Chief Flight Operations Inspector at DGCA and President of the Federation of Indian Pilots, told ETV Bharat that the July dip reflects a mix of seasonal and structural challenges. “Despite steady year-to-date growth, July 2025 saw a 2.9% dip in passenger traffic. I see this as a seasonal blip. IndiGo now commands over 65% of the market but has also reported a sharp drop in quarterly profit. The profits have reduced due to an increase in fuel and other charges. Though traffic loads for them have also shown a decline. Smaller airlines like Akasa Air and the Air India Group are reporting steep losses. Especially, Air India has shown an almost ₹28,000 crore loss since the Tatas took over the airline. The airline is mismanaged and is being run as an IT company. Not managed well. Also, the crash of AI-171 has further added to their agonies.”

He added, “Some passengers are scared to travel by Air India due to safety reasons and the number of incidents. Even DGCA has raised many safety concerns with AI. On the contrary, Akasa is a good airline and suffered losses due to delays in deliveries of B737 Max aircraft. Last year, load factors were strong at around 87%, but recent data suggests weakening utilization. Definitely falling loads may cripple the airline industry. The point is of high concern and needs introspection.”

Captain Naresh Beri, a former Air India pilot, added that the combination of poor fleet maintenance, engineering delays, and monsoon fears has heightened passenger anxiety, “Now people are afraid during the monsoon season and poor maintenance. Fewer planes are in the air because of engineering and refurbishing aircraft."

Seasonal And Weather Effects

The monsoon season normally stifles travel demand, specifically during July and August. Heavy rains often limit flight schedules, and passengers tend to postpone discretionary travel. This year, extended and irregular monsoons in many areas only suppressed demand. In addition to safety, Industry analysts noted that weather-related delays and cancellations also suppressed travel that would have happened because of the safety concerns.

Resilience Or Stagnation?

In spite of a setback in July, the January – July period in 2025 had 9.77 crore domestic passengers, up from 9.23 crore over that same period last year, giving us an annual growth of 5.9%. So overall, when viewed with the entire period, it signals the industry is returning to its growth trajectory.

To sustain the growth that is necessary, airlines are not being appropriately measured solely against the opportunities brought about by the seasonal recovery. They are also under considerable pressure to better manage safety oversight, vehicle maintenance, and cost controls moving forward. The re-consolidation of the industry into two major players may help to stabalize capacity, but the elimination of competition creates additional limitations around innovation.

In addition to the deadlines from the government as well as the DGCA to enhance scrutiny, it will also have drastic effects on the operational effectiveness of Air India. Strengthening safety audits, mandating stricter compliance, and restoring passenger confidence will be central to ensuring that tragedies like AI-171 do not derail the recovery momentum.

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