Indian aviation sector set to incur ₹18,000cr loss: Here's why
What's the story
The Indian aviation industry is projected to suffer a net loss of ₹17,000-18,000 crore in the current fiscal year. The losses are primarily due to lower passenger traffic and other factors. The estimate by rating agency ICRA is a significant increase from its earlier projection of a loss between ₹9,500-10,500 crore for 2025-26.
Revised projections
Forecast revised for domestic air passenger traffic growth
ICRA has also revised its forecast for domestic air passenger traffic growth to 0-3% in FY26. This is a significant drop from the previous estimate of 4-6%. The revision comes after a series of unfortunate events, including the Air India Boeing 787-8 crash in June and IndiGo's mass flight cancelations earlier this month.
Impact analysis
Factors influencing revised forecast
The slower-than-expected traffic growth in the April-November period of FY26 is due to cross-border tensions that caused flight disruptions and cancelations. The Air India aircraft accident in June also made travelers hesitant during the immediate post-accident period, ICRA said. Business travel has been affected by US tariffs, and operational disruptions at IndiGo from December 3-8 led to around 4,500 flight cancelations.
Future outlook
ICRA expects travel sentiments to dampen
Despite IndiGo's flight cancelations accounting for only about 0.4% of total annual industry departures, ICRA expects travel sentiments to dampen in the aftermath of the incident. The agency has also revised its international air passenger traffic growth forecast for Indian carriers this fiscal year from an earlier projection of 13-15% to a lower range of 7-9%.
Financial impact
Net loss forecast revised for Indian aviation industry
ICRA has revised its net loss forecast for the Indian aviation industry to ₹17,000-18,000 crore in FY26. The revision is due to an estimated lower domestic and international passenger traffic and the depreciation of the rupee against the USD resulting in foreign exchange losses. Earlier projections were much lower at ₹9,500-10,500 crore.