Turbulence for Indian Aviation

India’s domestic aviation industry is likely to report significantly higher losses in the financial year 2025–26 than earlier estimated, according to a report by rating agency ICRA. While the industry had initially projected losses of ₹9,500–10,500 crore, ICRA now expects them to rise sharply to around ₹17,000–18,000 crore.

The downgrade is attributed to slower passenger traffic growth, operational disruptions, and weakened travel sentiment. ICRA has revised its domestic passenger traffic growth forecast to 0–3 percent, down from the earlier estimate of 4–6 percent.

Incidents such as the Air India Boeing 787–8 aircraft accident and the cancellation of thousands of IndiGo flights have negatively impacted passenger confidence. Additionally, border tensions and frequent service disruptions led to lower-than-expected passenger volumes between April and November, the report noted.

Between December 3 and 8, disruptions in IndiGo’s operations resulted in the cancellation of around 4,500 flights. Although this accounted for only about 0.4 percent of the industry’s annual departures, it had a noticeable adverse impact on overall travel sentiment.

Growth in international passengers carried by Indian airlines during the current financial year is now expected to remain limited to 7–9 percent, compared to the earlier projection of 13–15 percent. Slower growth in both domestic and international segments, coupled with foreign exchange losses due to the rupee’s depreciation against the US dollar, is expected to further strain the industry’s financial health.

ICRA estimates domestic air passenger traffic to reach 15.4 million in November 2025, up 8.4 percent year-on-year from 14.2 million in November 2024, and 10.1 percent higher than October 2025 levels. During April–November 2025, domestic passenger numbers grew 2.2 percent year-on-year to 109.6 million. In October 2025, international passenger traffic handled by Indian airlines increased 8.3 percent year-on-year to 2.99 million.