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The sky’s getting costlier — unless you fly business

By Sohail Khan 21 September 2026, 11:57 am

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Business News›Industry›Transportation›Airlines / Aviation›India’s skies have a new economy-business class divide, report shows

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India’s skies have a new economy-business class divide, report shows
Synopsis

Economy airfares rose sharply across India's busiest domestic routes in early 2026, while business-class fares, conversely, experienced significant declines on many of these same routes. This divergence marks a notable shift from previous years' fare trends. Airlines are gaining pricing power in economy while facing competition in premium cabins. Increased demand and capacity constraints are driving up economy ticket prices.

Airplane — The strange split in India’s air fares is getting wider

Economy-class airfares surged across most of India’s busiest domestic routes in the first half of 2026, even as business-class fares moved in the opposite direction, highlighting a widening divide between the two cabins.

A Business Standard report on the domestic airfare market, citing data from aviation analytics firm Cirium, found that average economy fares rose year-on-year on 18 of India’s 20 busiest domestic routes in June 2026. On 17 of these routes, the increase was the sharpest recorded over the three-year period examined.

Also Read: India’s air travel boom leads Asia, prompting Airbus to raise growth forecast to 9.3%

Business-class fares, meanwhile, declined on 16 of the 20 routes by June, with falls reaching as much as 49.3% year-on-year.

The divergence marks a sharp change from the previous two years. In June 2024, economy fares had declined on 17 of the 20 busiest routes, while the market was evenly split a year later, with fares rising on 10 routes and falling on 10.

The shift suggests that airlines are gaining greater pricing power in economy while competition and additional premium capacity are putting pressure on business-class fares. Industry executives cited by Business Standard said business-class prices were correcting from levels they considered higher than warranted.

IndiGo’s entry into the segment has added to competition, while Air India has increased premium capacity on several major domestic routes using former Vistara aircraft and refurbished A320neos, the report said.

Economy fares, on the other hand, have been pushed higher as available capacity has not kept pace with demand. Airlines also see less need to rely on discounted fares to stimulate traffic, according to industry executives, cited in the report.

They are increasingly willing to forgo some price-sensitive travellers who flew when tickets were cheaper, while passengers travelling for essential reasons are seen as more willing and able to absorb higher fares.

The increase in fuel costs has added to the pressure, although the rise in economy fares began before the escalation in West Asia. Jet fuel prices were almost unchanged between September 2025 and February 2026, rising just 0.75%. They subsequently jumped 32.7% between February and September after the West Asia conflict began on the last day of February with Israeli and US attacks on Iran.

Cirium data reviewed by Business Standard shows that average economy fares had already risen on 19 of the 20 busiest domestic routes in February 2026, with only one route recording a decline. Business fares were moving in the opposite direction, falling on 19 of the 20 routes during the same month.

Mumbai-Bengaluru sets the tone

Mumbai-Bengaluru, India’s third-busiest domestic route, illustrates how sharply the market has turned.

Average economy fares on the route fell 15.1% year-on-year in June 2024 and another 1.3% in June 2025. In June 2026, however, they jumped 38.8%.

Business-class pricing on several routes has followed a different trajectory, with industry executives describing the movement as a correction after fares climbed to levels they considered unsustainable.

Air India, however, said its own premium segment continued to see strong demand. An airline spokesperson told Business Standard that business-class passenger numbers increased in June 2026 from a year earlier.

“Business-class fares have also risen over this period as well as through the current financial year to date, driven by demand and higher operating costs,” the spokesperson said, adding that booking patterns showed continued interest in Air India’s premium products.

The airline attributed this to the availability of new or significantly upgraded cabins on every metro-to-metro domestic route it operates.

Cirium’s numbers measure the actual base airfare paid to airlines, excluding taxes and fees, with fares averaged for each month.

IndiGo’s premium push

IndiGo’s entry into business class has also changed the competitive landscape.

The airline launched IndiGoStretch in November 2024, initially on the Delhi-Mumbai route. The product has 12 seats in a 2-2 configuration, along with wider seats, a 38-inch seat pitch, priority services, additional baggage and complimentary meals.

The product had expanded to 10 domestic routes by July 2026, alongside international services. Domestic routes include Delhi-Mumbai, Delhi-Pune, Mumbai-Hyderabad and Chennai-Mumbai.

Also Read: More flights to Vietnam on the cards after new aviation deal

However, Cirium’s data suggests IndiGoStretch alone does not explain the broader decline in business-class fares.

On the 10 busiest domestic routes where IndiGoStretch operates, average business fares fell between 2.9% and 7.5% year-on-year in June 2026. On the other 10 routes, where the product is not available, fares fell on six routes, with declines ranging from 3.9% to 49.3%. Fares increased on the remaining four.

Delhi-Mumbai offers another indication that the trend is broader than IndiGo’s premium product. Despite IndiGoStretch operating on the route since November 2024, average business-class fares rose 19.8% year-on-year in June 2025. By June 2026, they had fallen 6.4%.

Economy and business move in opposite directions

The sharpest divergence was recorded on Delhi-Srinagar, where economy fares jumped 85.1% year-on-year in June 2026 even as business fares fell 20.1%.

The economy increase was particularly notable because fares on the route had declined 20.2% in June 2024 and 35.7% in June 2025.

Bengaluru-Chennai saw economy fares rise 34.9% while business fares plunged 49.3%. On Delhi-Leh, economy fares increased 50.4%, against an 8% decline in business fares.

The same pattern appeared on Mumbai-Hyderabad, where economy fares rose 21.5% and business fares fell 2.9%. On Mumbai-Chennai, economy fares were up 17.8%, while business fares declined 4.6%. Delhi-Chennai recorded a 20.1% increase in economy fares against a 4.5% fall in business fares.

Taken together, the Cirium data points to an unusual phase in India’s domestic aviation market: travellers in the economy cabin are facing sharply higher fares, while those opting for business class are, on many of the country’s busiest routes, seeing prices move lower.

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