India's domestic passenger traffic contracted 1.1 percent year-on-year in July due to the nation's economic slowdown, said an international aviation group on Thursday.

The Indo-Asian News Service quoted the International Air Transport Association (IATA) as saying that after expanding at 20 percent plus rates through 2010 and early 2011, the Indian market stopped growing at the end of 2011.

"The uncertain economic outlook is having a negative impact on demand for air transport," Tony Tyler, director general and chief executive of IATA, was quoted as saying.

Domestic air passenger traffic fell 9.93 percent for the third straight month in July, which stood at 4.537 million from 5.037 million travelers in the corresponding month of last year.

However, international passenger demand in July increased by 3. 5 percent compared to the year-ago period.

Indian aviation was also hit this year by a series of strikes by pilots of the national carrier Air India and a semi-breakdown of the private Kingfisher. The fare prices of the flights also increased by more than 50 percent over the past one year.