Domestic aviation industry’s net losses are projected to nearly double to Rs 9,500 to Rs 10,500 crore in the current fiscal ending March next year, mainly impacted by moderating passenger growth and higher costs due to aircraft deliveries, a report said on Tuesday. While maintaining a stable outlook and projecting 4-6 per cent domestic passenger traffic growth in FY26, rating agency Icra said the airline industry’s financial performance is expected to remain under pressure.
“The Indian aviation sector is projected to report a wider net loss of ?95–105 billion in FY2026, compared to an estimated loss of ?55 billion in FY2025. The deterioration is linked to moderating passenger growth, coupled with higher deliveries of aircraft, which increase capital and operational expenses.
Icra forecasts the industry’s interest coverage ratio to range between 1.5 and 1.7 times for FY2026,” it said in the report. The agency also said the expected losses are significantly lower than Rs 21,600 crore and Rs 17,900 crore reported in FY2022 and FY2023, respectively. In the last financial year, the passenger traffic growth was 7.6 per cent, translating to total passenger volumes
of 16.53 crore. However, the report said, growth prospects for the current fiscal year are expected to remain moderate due to cross-border tensions, global disruptions, travel hesitancy post the June 2025 aircraft tragedy and recent disruptions related to air traffic control operations. In October, domestic air passenger traffic is estimated to have reached 1.43 crore, a year-on-year growth of 4.5 per cent and a sequential increase of 12.9 per cent from September.
“This momentum in travel demand was supported by an expansion in capacity, with domestic departures reaching approximately 99,816 during October, representing a sequential increase of 10.8 per cent and a 1.7 per cent rise year-on-year,” the report said. Supply chain bottlenecks and engine failure-related aircraft groundings also continue to hit the industry.
“As of March 31, 2025, around 133 aircraft across select airlines were grounded, representing 15–17 per cent of the total industry fleet. These operational setbacks have led to increased costs, including grounding-related expenses, higher lease rentals for replacement aircraft and reduced fuel efficiency,” the report said.
