A geopolitical crisis sparked by the outbreak of the US-Iran war on February 28, 2026, has shifted the balance of international air traffic to and from India. According to the latest data released by the Directorate General of Civil Aviation (DGCA) for the January–March 2026 quarter, Indian airlines experienced a sharp decline in international passengers, while non-Gulf foreign carriers successfully captured the market share.
Overall international passenger traffic to and from India remained relatively stable, dipping just 1.2% from 1.93 crore in Q1 2025 to 1.91 crore in Q1 2026. However, the distribution of those passengers changed drastically in March:
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Indian Carriers: Dropped 10%, flying 80.9 lakh passengers compared to 89.6 lakh in the same period last year.
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Foreign Carriers: Climbed 6%, rising to 1.1 crore passengers from 1.03 crore last year.
Divergent Impact: Why Foreign Airlines Gained While Indian Carriers Slipped
The airspace closures and rerouting forced by the conflict created highly unequal operating conditions for domestic and international airlines.
| Carrier Type | Operational Strategy & Market Impact |
|
Non-Gulf Foreign Airlines (Lufthansa, British Airways, SWISS) |
Pivoted Capacity to India: With their West Asian routes severely disrupted, these airlines quickly redeployed idle aircraft and sent larger wide-body planes to Indian hubs to absorb transit traffic heading to Europe and the Americas. |
|
Big Three Gulf Carriers (Emirates, Qatar Airways, Etihad) |
Transit Disruption: Heavily reliant on routing Indian passengers through hubs like Dubai and Doha, Emirates and Qatar Airways saw natural dips due to the “March mayhem,” though Abu Dhabi’s Etihad uniquely bucked the trend. |
|
Indian Carriers (IndiGo, Air India Group, Akasa, SpiceJet) |
The Airspace Trap: The closure of Pakistan’s airspace elongated Western flight paths for Indian-registered aircraft. Compounded by skyrocketing oil prices and a weakening Rupee, adding long-haul flights became financially unviable due to heavy fuel burn and forced refueling stops. |
The Domestic Shift: IndiGo Overtakes Air India Group Globally
The structural issues facing Indian aviation became highly visible during this quarter. Air India, the nation’s sole operator of an owned wide-body fleet capable of direct ultra-long-haul flights, was forced to cut capacity amid mounting financial losses. Concurrently, IndiGo’s international operations rely primarily on narrow-body aircraft or wet-leased wide-bodies that remain bound by the same airspace restrictions.
Because the Gulf corridor is the fundamental backbone for Indian carriers flying abroad, the regional conflict dragged down every major domestic player.
A Historic Flip: For the first time, IndiGo surpassed the combined Air India Group (Air India + Air India Express) in total international passenger carriage for a quarter. IndiGo carried 38.2 lakh passengers, while the Air India Group fell sharply to 37.7 lakh (down from 45.5 lakh in Q1 2025).
As March only captured the opening phase of the airspace restrictions, aviation analysts expect the full, more pronounced financial and operational impact of the West Asia war to reflect in the upcoming April–June quarter data.
