Demand Has Rebounded Faster Than Supply
Across India, there is a booming, post-pandemic demand for international travel. Students heading to overseas universities, families reuniting after years apart, and professionals resuming business travel are all contributing to a massive surge in passenger
numbers. This 'revenge travel' phenomenon means more people are competing for a limited number of seats. However, airline capacity has not kept pace with this explosive demand. Many carriers are still in the process of restoring their pre-pandemic international schedules, and issues like aircraft delivery delays have further constrained their ability to add more flights, creating a classic demand-supply imbalance that drives prices upward.
The Soaring Cost of Jet Fuel
Aviation Turbine Fuel (ATF) is the single largest operating expense for any airline, accounting for as much as 40-50% of total costs in India, significantly higher than the global average. Recent geopolitical tensions, particularly in the Middle East, have caused global crude oil prices to surge. This volatility is passed directly to airlines, which then pass the cost on to consumers through fuel surcharges on tickets. For international flights from India, the impact has been particularly severe, with airlines facing record-high fuel prices that make long-haul routes to Europe and North America increasingly expensive to operate.
Geopolitical Tensions and Longer Routes
Ongoing international conflicts have led to the closure of critical airspace corridors, forcing airlines to take longer, less efficient routes. Flights from India to Europe and North America, for instance, are now taking longer to bypass restricted zones, burning more fuel and increasing operational costs significantly. These reroutings not only add to the travel time but also directly contribute to higher ticket prices. The combined pressure has even led some carriers, like Air India, to temporarily reduce or suspend services on certain long-haul routes that have become commercially unviable, further shrinking seat availability.
A Weaker Rupee Adds to the Burden
The value of the Indian rupee against major foreign currencies like the US dollar and the Euro plays a crucial role in travel costs. Airlines have many expenses, such as aircraft lease payments, international airport charges, and maintenance costs, that are priced in dollars. When the rupee weakens, these dollar-denominated costs increase for Indian carriers. This added financial pressure is ultimately transferred to the traveller. For passengers, a weaker rupee also means that tickets priced in foreign currencies become more expensive, and every dollar or euro spent on accommodation and activities abroad costs more in rupees.
Reduced Competition and Capacity Cuts
The Indian aviation market has seen significant consolidation in recent years. With fewer airlines operating, particularly on major international routes, there is less competition to keep fares in check. On top of this, some major Indian carriers have had to cut their international capacity due to the high fuel prices and operational pressures. For example, reports in May 2026 noted that IndiGo had cut its international capacity by 17% compared to earlier in the year, while Air India also announced significant reductions on long-haul services. Fewer flights and fewer competitors mean the remaining airlines can command higher prices, especially during peak travel seasons.
