India Travel Is Booming but Airlines Are Still Under Pressure

The Indian government said domestic airlines lost nearly INR 53 billion ($576 million) in the 2024–25 financial year. That was a sharp jump from INR 9.2 billion ($100.8 million) a year earlier.

The result came even as domestic passenger traffic grew by 7.7 percent. More people are flying, but airlines are still under financial pressure.

Airlines are carrying more passengers, but costs are rising faster

India has one of the world’s biggest domestic aviation markets, and demand is still strong. Government officials said the latest traffic growth was supported by airport expansion, regional connectivity, airline capacity, and continued demand from tourism and business travel.

But airlines are still struggling to make money. The government linked the losses to fuel-price volatility, exchange-rate changes, high operating costs, pricing pressure, and supply-chain problems that are limiting aircraft availability.

The outlook suggests the pressure is not over yet

The financial strain may continue this year.

Credit ratings agency ICRA said Indian airlines could lose INR 170 billion to INR 180 billion ($1.85 billion to $1.96 billion) in 2025–26. It also lowered its forecast for domestic traffic growth to 0-3 percent.

Travel brands are building closer links to everyday consumer behavior

While airlines deal with margin pressure, other travel businesses are focusing on customer engagement.

Marriott Bonvoy has partnered with Swiggy so users in India can earn hotel loyalty points through food delivery, quick-commerce purchases, and restaurant bookings.

Uber is taking a similar approach through its partnership with AbhiBus, which lets users book intercity bus tickets inside the Uber app. In India, this is a meaningful step because bus travel remains a major part of domestic mobility.

The government is trying to spread tourism growth more widely

This broader push also fits a wider travel trend in India, where both the government and private companies are trying to expand tourism beyond a few established hotspots. Global hotel groups are also increasing their bets on the country’s long-term travel demand, as seen in IHG’s plan to grow its India portfolio to more than 400 hotels by 2031.

This strategy can also be seen in recent plans for sustainable mountain trails, turtle trails, and Buddhist tourism routes in several states. The broader goal is to bring visitors to newer destinations, reduce pressure on crowded hotspots, and make tourism a larger contributor to the economy over time.

Photo by Charles Postiaux on Unsplash