Why has air and rail travel stopped growing in India?

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Last month, the online brokerage firm Zerodha posted a graph on social media that showed domestic air travel in India had stopped growing. Over the past year, data from the Directorate General of Civil Aviation shows that the rolling 12-month total of domestic air passengers had remained flat over the past year.

Why do you think? pic.twitter.com/2aU7lnpBgi

— Markets by Zerodha (@zerodhamarkets) October 7, 2026

Right below the post were a bunch of comments griping about high fares. If you travel by air, this is a trend that would have been difficult to miss. Domestic air fares, in fact, have risen so much that one enthusiastic litigant even filed a public interest litigation with the Supreme Court of India asking for price caps. The bench, however, simply dismissed the case with the brusque comment, “Don’t travel by air.”

Airline oligopoly

While the court’s dismissal led to a round of kvetching on social media, it did do the right thing. A court of law is a poor place to decide the pricing of goods and services. Airline fares are decided using complex mechanisms and if they are to be regulated, the industry regulator is much better placed to do so.

Of course, the best way to “regulate” prices in an ideal situation would be to simply let the market decide. In India’s domestic aviation sector, unfortunately, things have gotten from bad to worse. As TCA Srinivasa Raghavan, a columnist and former aviation consultant points out, “Over the last 30 years we have gone from having over a dozen airlines to just two now.” With no competition, the current oligopoly is happy to gouge its customers, who have no other place to turn to.

Troublingly for both these airlines and the Indian economy is the fact that the base of people to gouge might have stopped growing. In the 1990s and the 2000s, millions of Indians took to the sky for the first time. Till then, domestic flights were something only the very rich took. The rest of us travelled by train. But this expansion might now be tapering off. The cohort of people who could afford air travel has now stopped expanding.

Et tu, rail

Troublingly, this trend extends even to rail travel. A brilliant data breakdown by Arjun Krishan Puri, a strategy executive at a fast-moving consumer goods company, on his blog points to the fact that rail passenger numbers have actually fallen since 2013.

Much of this is driven by second-class passengers (also called general unreserved), whom Puri argues are getting priced out of travelling by train.

In sharp contrast, however, air-conditioned bogie tickets on Indian railways have shown robust growth since 2013. AC three-tier, the cheapest and by far the largest segment within the AC bloc, for example, has gone up by nearly four times between the financial years 2012 and 2025.

Unfortunately, even this run seems to have come to an end: AC three-tier travel declined slightly in the financial year 2026.

Puri ends his data analysis, published in April, by comparing rail to domestic air travel and noting that the latter is “holding steady” even though “air fares have been higher over the last few years than they were before Covid”.

No man left behind

Six months later, however, it seems that air might have caught up with the troubles in the railways. An analysis by credit rating agency ICRA described Indian domestic aviation as a “sluggish demand environment” while pointing out that domestic passenger traffic has fallen by 6.5% year-on-year in September 2026.

Puri summarised his post by pointing out that his data might indicate that “income growth has deepened rather than widened in India” as the “benefits of economic development seem to have accrued more to existing middle and upper classes, rather than driving broad-based income growth”.

This has certainly been true till now. But if the latest trends like stagnant domestic air traffic hold, this might mean that, increasingly, even the middle and upper classes are coming under pressure.