Domestic air travel to grow 7-10 per cent in FY2026, but aviation sector will remain in losses: ICRA

New Delhi [India], June 20 (ANI): The Indian aviation industry is expected to continue growing, with domestic air passenger traffic expected to grow by 7-10 per cent year-on-year (YoY) in FY2026, reaching 175-181 million passengers, according to ICRA report.

This follows a 7.6 per cent YoY increase in FY2025, when the total domestic traffic stood at 165.4 million passengers. Notably, this figure is 16.8 per cent higher than pre-Covid levels in FY2020, indicating a strong rebound in air travel demand.

Despite the increase in passenger numbers, ICRA expects the Indian aviation industry to report a net loss of ₹20,000-₹30,000 crore in FY2026.

ICRA stated in it's report, "The Indian aviation industry to report a net loss of Rs. 20-30 billion in FY2026."

This projected loss is similar to the estimated losses in FY2025, and a stark contrast to the ₹1,600 crore net profit reported in FY2024.

The report attributes this ongoing loss to rising costs, high jet fuel prices, and mounting lease liabilities associated with new aircraft deliveries.

The industry's interest coverage ratio--a key financial metric-- is projected to be between 1.5 and 2.0 times in FY2026, suggesting some improvement in financial stability despite ongoing challenges.

International travel by Indian carriers is also expected to see robust growth. ICRA forecasts a 15-20 per cent rise in international passenger traffic in FY2026.

In FY2025, Indian airlines carried 33.86 million international passengers, a 14.1 per cent increase from the previous year and 49 per cent higher than pre-Covid levels in FY2020.

In terms of recent monthly trends, domestic passenger traffic in May 2025 was estimated at 14.36 million, a 4.1 per cent increase from 13.80 million in May 2024, although it remained largely flat compared to April 2025.

Airlines also deployed 5.1 per cent more capacity in May 2025 compared to the same month last year.

While air travel in India continues to recover and expand, ICRA warns that the pace of financial recovery will be slow due to the high fixed costs in aviation, elevated aviation turbine fuel (ATF) prices, and higher interest burdens from aircraft leasing.

Airlines are expected to face pressure on yields as they strive to maintain high passenger load factors (PLFs), even as operational costs remain high. (ANI)

(The story has come from a syndicated feed and has not been edited by the Tribune Staff.)