Foreign airlines have strengthened their grip on India’s international aviation market, increasing their passenger share to 57.6 per cent in the March quarter of FY26, while Indian carriers’ share slipped to 42.4 per cent, according to the latest data from DGCA.
The shift comes at a time when Indian airlines such as Air India and IndiGo are aggressively expanding their overseas networks and adding capacity. However, a combination of geopolitical disruptions and structural market factors has worked in favour of foreign carriers.
1. Iran War Disrupted a Key International Market
The conflict involving Iran emerged as one of the biggest challenges for Indian airlines during the quarter. The war led to airspace restrictions and operational disruptions across West Asia, a region that accounts for a large chunk of India’s international passenger traffic.
Indian carriers have significantly increased their exposure to Gulf destinations over the past few years and therefore faced a greater impact from flight disruptions, schedule changes and weaker travel demand on affected routes.
As a result, Indian airlines were unable to fully capitalise on demand growth in one of their most important international markets, allowing foreign carriers to gain market share.
2. Pakistan Airspace Closure Increased Costs for Indian Airlines
Indian carriers continue to take longer flight routes due to Pakistani airspace restrictions, which have remained in place since India’s strikes into the South Asian country in 2025 following a terrorist attack in India in Pahalgam last year. The closure has forced Indian airlines to take longer routes for several westbound international flights, particularly services to Europe, North America and parts of the Middle East.
Indian carriers have significantly increased their exposure to Gulf destinations over the past few years and therefore faced a greater impact from flight disruptions, schedule changes and weaker travel demand on affected routes.
As a result, Indian airlines were unable to fully capitalise on demand growth in one of their most important international markets, allowing foreign carriers to gain market share.
2. Pakistan Airspace Closure Increased Costs for Indian Airlines
Indian carriers continue to take longer flight routes due to Pakistani airspace restrictions, which have remained in place since India’s strikes into the South Asian country in 2025 following a terrorist attack in India in Pahalgam last year. The closure has forced Indian airlines to take longer routes for several westbound international flights, particularly services to Europe, North America and parts of the Middle East.
01/06/2026 News18
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