Akasa Air expands capacity in India as rivals face Iran war disruptions

India’s newest airline, Akasa Air, has been expanding its schedule even as wider disruptions tied to the Iran war have made life harder for some of its rivals and added pressure across financial markets. According to Bloomberg, Akasa was the only carrier to add meaningful capacity in India’s domestic market in recent months, a development that is turning the relatively young airline into a more serious challenger to the long-dominant IndiGo and Air India.

The company’s growth comes at a time when airline operations across the region have been complicated by the conflict involving Iran. The Bloomberg report said those disruptions have crimped competitors, helping Akasa stand out as it increases flights. For travelers, that could mean more options on some routes and, potentially, more competition on fares if the expansion continues.

Akasa Air is still a newcomer in a market that has long been shaped by a two-horse race between IndiGo and Air India. But its ability to keep adding capacity while other carriers pull back suggests it is trying to use the current environment to gain ground. The airline has positioned itself as a lower-cost alternative, and its continued expansion could make it a more visible player in India’s fast-growing aviation sector.

The broader backdrop is not just about airlines. Bloomberg also reported that India’s state-controlled banks have been under pressure, with a government bank index falling 6% this month as bond yields climbed to a two-year high. That matters because higher yields can raise funding costs across the economy, including for heavily indebted industries and banks that hold large amounts of government securities.

The war in Iran has also been feeding inflation worries well beyond India. In Europe, ECB Governing Council member Martin Kocher said the European Central Bank may need to raise interest rates next month unless a sustainable peace deal between the United States and Iran is reached. That underscores how the conflict is spilling into energy prices, borrowing costs and broader market expectations around the world.

For India’s aviation sector, the near-term question is whether Akasa can keep growing without running into the same operational and cost pressures that are affecting the rest of the industry. For now, its expansion has made it an outlier — and one of the clearest beneficiaries of a turbulent period that is reshaping competition in the skies.