New Delhi: India’s aviation industry is projected to record a net loss in the range of Rs 20–30 billion in the financial year 2025–26 (FY26), broadly in line with the estimated losses for FY2024–25 (FY25), according to credit rating firm ICRA.
In its report, the firm stated that these losses are expected to persist compared to the net profit of around Rs 16 billion recorded in FY2024, due to anticipated pressure on yields as airlines strive to maintain adequate passenger load factors (PLF) amid continued high aviation turbine fuel (ATF) prices.
While demand for air travel remains robust, airlines are unlikely to significantly raise ticket prices due to competitive pressures and price sensitivity in the domestic market. This, coupled with higher fuel costs, is expected to impact profitability.
Adding to the financial strain, interest costs are likely to increase in FY26 due to growing lease liabilities, as several airlines have scheduled aircraft deliveries. The resulting rise in debt burden is expected to push up financing costs, further compressing margins.
Despite these challenges, the projected losses for FY26 represent a marked improvement compared to the massive setbacks of the past. The industry reported staggering net losses of Rs 235 billion in FY22 and ₹174 billion in FY23, largely driven by COVID-19-related disruptions and fuel cost volatility.
Financial resilience, however, is gradually improving. The sector’s interest coverage ratio—a key indicator of its ability to service debt—is expected to range between 1.5 and 2.0 times in FY26, suggesting relatively stable debt-servicing capacity despite bottom-line pressures.
In June 2025, domestic air passenger traffic was estimated at 138.7 lakh, a 5.1% increase over 132.1 lakh in June 2024. However, it witnessed a marginal decline of 1.3% on a sequential basis. Airlines’ capacity deployment in June 2025 was 4.9% higher than in June 2024, but 2.3% lower compared to May 2025. For Q1 FY2026 (April–June 2025), domestic air passenger traffic stood at 422.4 lakh, reflecting a year-on-year (YoY) growth of 5.1%.
In May 2025, international passenger traffic for Indian carriers was 29.7 lakh, marking a YoY growth of 7.3%. However, it was 7.9% lower on a sequential basis due to geopolitical headwinds. For the first two months of FY2026 (April–May 2025), international passenger traffic for Indian carriers stood at 59.8 lakh, a YoY growth of 12.1%.
For FY2025 (April 2024–March 2025), domestic air passenger traffic stood at approximately 1,653.8 lakh, representing a YoY growth of 7.6%. Additionally, international passenger traffic for Indian carriers during the same period was 338.6 lakh, a YoY growth of 14.1%.
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