Indian aviation sector seen posting up to Rs 18,000 crore loss in FY26

India’s domestic aviation industry is estimated to post a net loss of around Rs 17,000–18,000 crore in the current financial year, driven by softer passenger traffic and a series of operational disruptions, ratings agency ICRA said on Monday.

According to a PTI report, the industry was earlier projected to record a loss of Rs 9,500–10,500 crore in FY26.

ICRA has also revised down its forecast for domestic air passenger traffic growth in FY26 to 0–3 per cent from its earlier estimate of 4–6 per cent, citing multiple factors including the Air India Boeing 787-8 aircraft crash in June this year and the cancellation of thousands of flights by IndiGo earlier this month.

The ratings agency stated that the downgrade reflects slower-than-expected traffic growth during the April–November period of FY26, which was impacted by cross-border escalations that led to flight disruptions and cancellations during the year, as well as the Air India accident in June that made travellers hesitant, at least in the period immediately following the tragedy.

ICRA also pointed to the impact on business travel due to headwinds arising from US tariffs, and added that the downward revision incorporates the effect of operational disruptions at IndiGo between December 3 and 8, when around 4,500 flights were cancelled.

While the IndiGo cancellations accounted for only about 0.4 per cent of the total annual industry departures, ICRA said it expects travel sentiment to remain dampened in the aftermath of the episode.

The agency has further revised its international air passenger traffic growth forecast for Indian carriers in FY26 to 7–9 per cent, down from the earlier projection of 13–15 per cent.

ICRA stated that the combination of lower domestic and international passenger traffic, along with the depreciation of the rupee against the US dollar resulting in foreign exchange losses, prompted it to raise its net loss estimate for the Indian aviation industry to Rs 17,000–18,000 crore in FY26, compared with the earlier projection of Rs 9,500–10,500 crore.

The agency informed that domestic air passenger traffic for November 2025 was estimated at 1.54 crore, up 8.4 per cent from 1.42 crore in November 2024 and 10.1 per cent higher than 1.40 crore in October 2025.

For the April–November 2025 period, domestic air passenger traffic stood at about 10.96 crore, reflecting a year-on-year growth of 2.2 per cent, ICRA said.

It added that international passenger traffic for Indian carriers in October this year was recorded at 29.9 lakh, marking a year-on-year increase of 8.3 per cent and a sequential growth of 6 per cent.