Facing significant financial losses in fiscal year 2026 due to soaring aviation fuel prices, a depreciating rupee, and ongoing airspace restrictions over West Asia, Indian domestic airlines are strategically reorienting their networks. Carriers are rapidly expanding services to destinations across Southeast Asia, Japan, and the Indian Ocean region to hedge against the impact of capacity curtailment in the Middle East.
The rerouting comes as a direct response to a challenging operating environment, which has disproportionately affected airlines with substantial operations in the Gulf. Reports indicate that Air India alone is projected to incur $2.4 billion in losses for FY26 and is actively seeking fresh capital injections from its parent company, Tata, and Singapore Airlines.
Akasa Air Expands to Vietnam
Akasa Air has announced a strategic expansion into Southeast Asia, designating Hanoi, Vietnam, as its seventh international destination. Starting September 4, 2026, the airline will operate four weekly direct flights connecting Mumbai and Hanoi, marking a significant step in its international growth.
Air India Strengthens East Asia Connectivity
Air India is also bolstering its presence in East Asia. From May 1, 2026, the airline will introduce non-stop flights between Delhi and Hanoi, operating five times a week. This makes Hanoi Air India’s second gateway in Vietnam, complementing its existing daily services to Ho Chi Minh City, adding 7,028 seats monthly to and from Vietnam.
Furthermore, Air India will launch non-stop flights between Mumbai and Tokyo (Haneda) beginning June 15, 2026, enhancing its current Delhi-Tokyo (Haneda) services and expanding connectivity to Japan.
IndiGo Focuses on Indian Ocean Routes
IndiGo is strengthening its network to Indian Ocean countries, including enhanced connectivity to Sri Lanka and Réunion Island, a French overseas territory. The airline has launched new, direct flights between Delhi and Colombo, operating six times per week with its A320 aircraft. IndiGo now manages over 55 weekly flights to Colombo from five Indian cities: Mumbai, Bengaluru, Hyderabad, Chennai, and Delhi.
Additionally, IndiGo connects Chennai and Tiruchirappalli to Jaffna with 10 weekly flights. Effective April 29, 2026, the carrier will introduce thrice-weekly direct flights between Chennai and Réunion Island, utilizing its Airbus A320 aircraft for this new route.
This widespread network adjustment is crucial for domestic carriers, as the summer schedule has already seen significant curtailment due to Middle East airspace closures. Previously, over 80% of Akasa Air and Air India Express's capacity, along with a sizeable portion of IndiGo's network, was deployed in the Gulf region.