New Delhi, Sept. 23 -- Air India clawed back some lost ground in India's domestic aviation market in August as the Tata group expanded operations, largely through budget carrier Air India Express. Its market share rose 2.7 percentage points to 26.7%, while that of market leader IndiGo slipped to 65% from its July peak of 67.4%, as per Directorate General of Civil Aviation (DGCA) data.

The Tata airlines carried 3.23 million domestic passengers in August, up 12.4% from 2.9 million in July, snapping two months of declines. The rebound was driven by additional capacity rather than a broader pickup in demand, with Air India Express stepping up flights as the group continued to redraw the roles of its two airlines, a strategy taking shape just...