Will the Domestic Aviation Industry Encounter Greater Losses in FY26?
Synopsis
The Indian aviation industry faces unprecedented challenges, with projected losses soaring to Rs 170-180 billion in FY26. A mix of geopolitical conflicts, tragic incidents, and operational crises are dampening passenger traffic forecasts, raising concerns about the industry's recovery.
Key Takeaways
The Indian aviation industry is projected to face significant losses of Rs 170-180 billion in FY26.
Geopolitical tensions and operational crises are major factors behind this downturn.
Passenger traffic growth forecasts have been revised downward for both domestic and international travel.
ICRA expects a dampening of travel sentiments following recent events.
IndiGo's operational issues led to thousands of flight cancellations, affecting overall industry performance.
New Delhi, Dec 29 (NationPress) A combination of factors including the India-Pakistan conflict in May, a tragic Air India crash in June, recent flight cancellations due to a severe IndiGo crisis, and the depreciation of the rupee against the US dollar could lead to losses ranging from Rs 170 to Rs 180 billion for the Indian aviation sector this fiscal year (FY26). This figure surpasses previous estimates of Rs 95 to Rs 105 billion, according to a report released on Monday.
ICRA has adjusted its forecast for growth in domestic air passenger traffic to a range of 0-3 percent in FY26, down from its earlier prediction of 4-6 percent.
This adjustment is indicative of slower-than-expected traffic growth observed during the first eight months of FY26, impacted by geopolitical tensions leading to flight disruptions, the aircraft accident in June 2025 that created a sense of caution among travelers, and adverse effects on business travel due to challenges from US tariffs. Additionally, operational disruptions at IndiGo from December 3 to December 8, 2025, resulted in approximately 4,500 flight cancellations.
“Although the IndiGo flight cancellations represented just 0.4 percent of total annual industry departures, ICRA anticipates a potential dampening of travel sentiment following this incident. Furthermore, ICRA has revised its forecast for international air passenger traffic growth for Indian carriers for FY2026 to 7-9 percent, down from previous estimates of 13-15 percent,” the agency stated.
In November 2025, domestic air passenger traffic was recorded at 154.5 lakh, reflecting an 8.4 percent increase from 142.5 lakh in November 2024, and a 10.1 percent increase compared to 140.3 lakh in October 2025.
“For the first eight months of FY2026 (April-November 2025), domestic air passenger traffic reached 1,096.5 lakh, showing a 2.2 percent year-on-year growth,” the report indicated.
In October 2025, international passenger traffic for Indian carriers was 29.9 lakh, reflecting an 8.3 percent year-on-year growth and a sequential increase of 6.0 percent.
“For the first seven months of FY2026 (April-October 2025), international passenger traffic for Indian carriers was 205.5 lakh, marking a 9.0 percent year-on-year growth,” the report highlighted.
Point of View
It is evident that the domestic aviation sector is navigating through turbulent times. The combination of geopolitical tensions and operational issues presents a significant threat to recovery. Our nation must prioritize strategies to stabilize and boost confidence among travelers and stakeholders in the aviation industry.
NationPress
9 May 2026
Frequently Asked Questions
What are the estimated losses for the Indian aviation industry in FY26?
The estimated losses for the Indian aviation industry in FY26 are projected to be between Rs 170 to Rs 180 billion.
What factors contributed to the revised loss projections?
Factors include the India-Pakistan conflict, a deadly Air India crash, IndiGo flight cancellations, and rupee depreciation against the US dollar.
How has passenger traffic growth changed for FY26?
ICRA has revised its forecast for domestic air passenger traffic growth to 0-3 percent for FY26, down from the earlier projection of 4-6 percent.
What was the impact of IndiGo's operational disruptions?
IndiGo's operational disruptions led to approximately 4,500 flight cancellations, affecting overall travel sentiment.
What is the growth forecast for international passenger traffic?
The growth forecast for international passenger traffic for Indian carriers has been revised to 7-9 percent for FY2026, down from 13-15 percent.
