India’s Airlines Face A Winter Test As Passenger Traffic Falls

By Zinal Dedhia

What?

For travellers hoping to fly during the festive and winter season, the usual rule of booking early to get a better deal is becoming less reliable. Airfares are high, airline capacity remains constrained on some routes, and travel companies are seeing fewer bookings and enquiries than they normally would at this time of the year.
The impact is beginning to show up in India’s passenger traffic numbers.

Domestic passenger traffic fell 6.3% year-on-year in August, following a 4.8% decline in July and a 1% fall in June, according to Directorate General of Civil Aviation (DGCA) data compiled by ICRA.

The contraction comes just as airlines enter the October-December period when travel demand typically strengthens.

The slowdown is a sharp reversal from the growth India’s aviation market has become accustomed to.
Domestic passenger traffic grew 8.3% in 2023, 6.1% in 2024 and 3.5% in 2025. In the first eight months of 2026, traffic is now marginally below the corresponding period last year.

But this is not simply a story of Indians travelling less.

Why?

Airlines have been operating with tighter capacity, while higher aviation turbine fuel (ATF) prices have pushed up fares. Travellers are responding by waiting longer to book, cutting back on discretionary trips or, on some shorter routes, switching to trains.

“Demand is not the problem,” said Gaurav Patwari, chief business officer at Cleartrip. The roughly 6% decline in domestic travel in August was primarily a supply-side issue, he said, with reduced airline seat capacity and higher fares making travellers more deliberate about when and whether to book.

That leaves India's airlines facing a difficult winter test. There may still be demand for travel, but converting that demand into passenger growth will depend on how many seats airlines put into the market, and at what price.

IKEA Bets On Hotels, Offices To Expand India Footprint

By Govindraj Ethiraj

What?

The Swedish retailer is planning two mixed-use developments in Gurgaon and Noida, each spanning 2.5 million square feet.

The projects will include IKEA stores alongside other commercial spaces and are expected to come up in a few years.

According to Patrik Antoni, CEO of IKEA India, they represent the company’s biggest investment anywhere in the world.

IKEA is also expanding through smaller stores of around 70,000 and 25,000 square feet. Its online channel already accounts for around 30% of sales by value in India.

The company plans to open a second large store in Bengaluru in November, with more stores planned over the following year. It is also opening a smaller store in Pune.

Why?

The expansion reflects changing shopping habits and growing online sales. IKEA wants to be closer to consumers, rather than relying only on large stores on city outskirts. The mixed-use developments will also allow it to earn additional income from commercial spaces while attracting more shoppers to its stores.

The company is strengthening its supply chain too. It currently sources products worth around €400 million, or Rs 4,000 crore, from India, mostly for export.

A recently opened product development centre will help develop products for Indian consumers and identify export opportunities.

Why it matters?

IKEA’s strategy signals a broader approach to growth in India, combining retail, commercial real estate and local product development.

With urbanisation and changing consumer habits creating new opportunities, the company is betting on multiple formats to reach more households and build its presence in the country.

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11.39%

That is how much India’s wholesale price inflation accelerated to in September from 9.92% in August, driven by higher prices of fuel and power, food articles and manufactured products, provisional government data showed on Wednesday.

By The Numbers: Fuel and power inflation climbed to 25.85% from 22.93% in August, while food inflation rose to 8.66% from 7.05%.

Inflation in manufactured products increased to 9.76% from 8.37%, led by higher prices of basic metals, chemicals, textiles and rubber products.

Inflation in crude petroleum and natural gas surged to 57.32% from 34.41% in August.

The Wholesale Price Index rose to 112.5 in September from 110.8 in August.

Cumulative wholesale inflation during April-September 2026 stood at 9.85%, compared with a decline of 0.20% in the same period last year.

Forecast: Rising wholesale prices could increase input costs for manufacturers, particularly in metals, chemicals and textiles.

Higher fuel and food prices may also add to cost pressures across businesses, although the impact on retail prices will depend on how much of the increase companies pass on to consumers.

Air India Targets A350 Costs

Air India CEO Tewolde Gebremariam is exploring ways to reduce the higher-than-expected cost of maintaining the airline's A350 fleet and has held initial discussions with its service providers, Bloomberg reported, citing people familiar with the matter. The airline operates six A350-900 aircraft powered by Rolls-Royce Trent XWB engines and placed an order for 80 such engines, with options for 20 more, in 2023.

Context: Air India, which uses Airbus Flight Hour Services and Rolls-Royce’s TotalCare maintenance programme, has flagged maintenance costs that exceed expectations. The carrier posted a record annual loss of more than Rs 22,000 crore in the last fiscal year and is seeking Rs 10,000 crore in funding from Tata Sons and Singapore Airlines. Tata Sons has also directed the airline to slow expansion and consolidate.

What's Next? Tewolde is looking to improve cargo utilisation, address maintenance issues and is considering folding Air India Express into the main group as part of the turnaround effort.

West Asia Still Fuels India

Countries in West Asia, led by the UAE, Iraq and Saudi Arabia, will remain India’s main energy suppliers even after the war ends. The United States cannot replace them, Business Standard reported, quoting senior officials. India’s imports of oil and gas from the US fell 43% in September to 1.22 million tonnes, the lowest level since April.

The Lead: Imports from West Asia jumped 67% to 13.56 million tonnes. Gulf oil exports have almost returned to pre-war levels, as producers found other ways to ship their oil. Officials said US oil has become less attractive because shipping costs are at record highs, the US has little of the crude type Indian refineries prefer, and Russian oil is cheaper.

Setup: The drop comes as India and the US struggle to finalise a trade deal, in which the US wants India to buy more energy. US Trade Representative Jamieson Greer said a deal was not “imminent.”

Sovereignty Without Isolation

On the second day of the Bloomberg New Economy Forum in New Delhi, a central question was how countries can protect their strategic interests without retreating from the global economy.

How We Got Here: India’s answer, as Electronics and IT Minister Ashwini Vaishnaw and Commerce Minister Piyush Goyal argued, lies in building domestic capabilities while maintaining international partnerships. From semiconductors and AI to energy and food, the pandemic exposed vulnerabilities in critical supply chains. But self-reliance, Goyal stressed, does not mean isolation: India’s trade agreements now cover economies worth a combined $70 trillion.

External Affairs Minister S. Jaishankar placed this challenge in a broader geopolitical context, warning that countries increasingly weaponise control over resources, finance and the dollar. Rejecting the label of a “middle power”, he described India as a “power in the middle”.

Flashpoint: The debate also extended to emerging technologies. Bharti Enterprises Chairman Sunil Bharti Mittal called for AI safeguards before accidents force governments to act. On satellite internet, he said Bharti’s Eutelsat OneWeb was ahead of Elon Musk’s Starlink in the regulatory queue, after waiting five years for approvals.

Race For Data Centre Power

India is preparing a policy for data centres, with the government seeking to keep consumers from paying more for electricity as the sector’s power use draws concern worldwide, Junior IT Minister Jitin Prasada said on Wednesday. However, he did not say what the policy would cover or when it would be unveiled.

Overview: Prasada said that in some countries, data centres use so much power that household electricity bills go up. “We don’t want to get into that,” he said, and added that India is a very good place for large data centres.

Currently, India has no dedicated policy for the sector. They are approved under existing environmental and building rules, and some states offer their own benefits.

Context: The move follows protests by residents in Mumbai and Visakhapatnam against planned Amazon and Google data centres, over concerns including water, electricity and noise. Environmentalists also say Google’s $15 billion Visakhapatnam project threatens wildlife and improperly uses temple land. Both companies deny wrongdoing, saying their facilities use advanced technologies to minimise resource use.

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Goldman’s Big Prediction For Indian AI Stocks

On Episode 1005 of The Core Report, financial journalist Govindraj Ethiraj talks to Vishal Mehta, India Leader – Energy Practice at Boston Consulting Group (BCG) as well as Harsh Roongta, Founder at Fee Only Investment Advisers LLP.

• Goldman’s Big Prediction For Indian AI Stocks

• Rupee Continues To Rise As RBI Battles Speculation

• Wholesale Inflation Jumps

• India’s Energy Grid Is Seeing Big Shortages, What Is The Way Out?

• The Insurance Industry Has Pushed Back On The Regulator's Proposals On Slashing Distributor Commissions. Where Will The Meeting Point Be?