However, the financial outlook for the sector remains bleak. ICRA forecasts a net loss of ₹20,000–₹30,000 crore for FY2026. “The Indian aviation industry is expected to report a net loss of ₹20–30 billion in FY2026,” stated the agency in its report. These projections align with estimated losses for FY2025 and starkly contrast the ₹1,600 crore net profit recorded in FY24.
The report attributes ongoing losses to several factors, including high jet fuel prices, rising lease liabilities from fleet expansion, and heightened operating costs. Although passenger demand stays strong, these financial challenges are likely to heavily impact airline profitability.
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Moreover, despite a significant expansion in international traffic, Indian carriers are expected to see a 15–20% increase in international passenger numbers during FY26. In FY25, they transported 33.86 million international passengers, marking a 14.1% rise from the previous year and an impressive 49% surge compared to FY20 figures.
Recent monthly trends indicate an overall growth trajectory. Domestic passenger traffic in May 2025 was estimated at 14.36 million, reflecting a 4.1% increase from May 2024. However, this figure remained relatively stable compared to April 2025, suggesting a possible plateau in monthly growth. Airlines deployed 5.1% more capacity in May 2025 than in the same month the previous year.
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Despite the robustness in passenger demand, ICRA warned that the pace of financial recovery will be sluggish. The aviation sector is contending with high fixed costs, costly aviation turbine fuel (ATF), and significant interest payments tied to aircraft leasing.
As airlines strive to maintain high passenger load factors (PLFs) in a competitive market, pressure on ticket pricing is expected to continue, potentially exacerbating profitability challenges.
(Edited by : Jerome Anthony)
