New Delhi: India’s aviation industry is expected to cut net losses by one-third to Rs 110–120 billion in 2026 27 as domestic passenger traffic growth will recover to 6–8 per cent, a report said on Tuesday.
The report from ICRA said the current losses at Rs. 170–180 billion will see a huge cut as domestic traffic touches 175–179 million passengers in 2026-27.
The international air passenger traffic growth for Indian carriers is expected to remain relatively stronger, aided by low base effect, expanding e-visa/visa-on-arrival coverage, and the government’s focus on developing theme-based and iconic tourist destinations.
The ratings agency estimated international air passenger traffic growth at 7-9 per cent for 2025-26 and 8-10 per cent for 2026-27.
“ICRA has maintained a Stable outlook for the Indian aviation industry, supported by expectations of modest growth in domestic air passenger traffic and a gradually improving operating environment, despite near term challenges,” said Kinjal Shah, Senior Vice President and Co Group Head, ICRA.
The industry faced modest domestic growth in the current fiscal due to cross border escalations, weather disruptions, travel hesitancy after the June 2025 aircraft accident, headwinds from elevated US tariffs and operational disruptions at IndiGo in December 2025, the report further said.
Aviation turbine fuel (ATF) prices and the rupee-dollar movement have a significant bearing on the airlines’ profitability.
ATF averaged Rs. 91,173 per kilolitre (KL) in 11 months of 2025 26 and the rupee depreciated about 3.2 per cent year on year in nine months of 2025 26. Fuel accounts for 30–40 per cent of operating costs of airlines, the report noted.
“While currency depreciation of the said extent may not be materially disruptive in isolation, it adds pressure to the cost structure of a loss-making industry where key expenses like aircraft lease payments, aircraft and engine maintenance costs, and debt servicing are highly sensitive to the currency movements,” the report said.
(IANS)
