Indian carriers recorded a sequential uptick in international passenger traffic in June 2026 even as the sector grappled with sharply elevated aviation fuel costs and a weakening rupee, according to a report released on Monday, 3 August by financial services firm Equirus. Domestic passenger load factors held firm, reflecting resilient demand and disciplined capacity management across the industry.

Domestic Traffic: Seasonal Slowdown, Healthy Load Factors

Domestic passenger volumes stood at approximately 13.5 million in June 2026, easing 1 per cent year-on-year and 12 per cent month-on-month — a pattern consistent with the seasonal moderation that typically follows the peak summer travel window. Revenue Passenger Kilometres (RPKs) held broadly steady year-on-year at 13.3 billion, while Available Seat Kilometres (ASKs) dipped 2 per cent year-on-year as airlines trimmed capacity in line with softer volumes.

The passenger load factor (PLF) came in at 85.7 per cent, improving 118 basis points year-on-year, signalling that carriers maintained efficient aircraft utilisation even as overall passenger numbers eased. The Equirus report noted that load factors remain 'robust despite seasonal moderation,' underlining the underlying strength of domestic demand.

International Traffic Picks Up

Foreign-bound passenger traffic carried by Indian airlines climbed to approximately 2.4 million in June, up 4 per cent over May 2026, though it remained below the comparable period last year. Flight departures on international routes rose 6 per cent month-on-month, while capacity stayed broadly stable — signalling a gradual restoration of overseas operations following disruptions in prior months.

Fuel Costs and Currency Headwinds Bite

The sector's cost environment remained challenging. Brent crude averaged approximately $87.3 per barrel in July 2026, up 20 per cent both year-on-year and month-on-month, according to the Equirus report. Singapore jet fuel prices hovered near $155 per barrel, a 71 per cent annual surge that directly pressures airline operating margins.

Compounding the fuel stress, the Indian rupee weakened to around ₹95.4 against the US dollar, raising the cost of aircraft leasing, maintenance contracts, and other dollar-denominated expenses. Together, these twin headwinds — fuel and forex — are 'likely to influence profitability in the near term,' the report cautioned.

Sector Outlook: Mixed but Demand Holds

Equirus characterised the current operating environment as 'mixed,' with passenger demand — particularly in the domestic market — remaining a relative bright spot even as cost pressures mount. Airlines have responded with measured capacity discipline rather than aggressive expansion, a strategy that has so far kept load factors elevated.

With fuel prices and currency volatility still unresolved, the sector's ability to pass on costs through fare adjustments without dampening demand will be the critical variable to watch in the coming quarters.