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India's Aviation Losses to Drop by One-Third as Domestic Traffic Rebounds

India's aviation industry is projected to significantly reduce its net losses by about one-third in the 2026-27 fiscal year. This improvement is driven by an expected recovery in domestic air passenger traffic growth to 6-8 per cent. International traffic for Indian carriers is forecast to grow even more robustly, aided by government tourism initiatives. However, the sector remains sensitive to fuel costs and currency fluctuations, which pressure its cost structure.

Key Points: India Aviation Losses to Fall 33% with 6-8% Traffic Growth

  • Net losses to fall to Rs 110-120bn
  • Domestic traffic to grow 6-8%
  • International traffic growth stronger at 8-10%
  • Fuel costs remain 30-40% of expenses
  • Stable industry outlook maintained
2 min read

Aviation losses in India to decline by one‑third as domestic traffic grows 6-8 pc: Report

ICRA report forecasts India's aviation net losses to shrink to Rs 110-120 billion in 2026-27 as domestic passenger traffic grows 6-8%.

"ICRA has maintained a Stable outlook for the Indian aviation industry, supported by expectations of modest growth in domestic air passenger traffic - Kinjal Shah"

New Delhi, Feb 24

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

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Reader Comments

S
Shreya B
Good to see international traffic growing faster! The e-visa and focus on tourism are smart moves. More connectivity means more jobs in hospitality and related sectors. Hope the airlines use this period to improve service quality as well.
A
Aman W
The dependency on ATF prices and rupee-dollar movement is the real worry. We are too vulnerable to global shocks. Need long-term strategies like more sustainable fuel options and supporting domestic aircraft manufacturing under the 'Make in India' initiative.
P
Priyanka N
As someone who travels frequently for work between Tier-2 cities, the growth in domestic traffic is very visible. Flights are fuller. But the infrastructure at many airports hasn't kept pace. Baggage claim and security queues are a nightmare. Hope some profits are reinvested there.
D
David E
Interesting report. The "modest growth" outlook seems realistic given the headwinds mentioned, like the IndiGo disruption and that tragic accident last year. Safety and operational reliability must remain the absolute top priority, even over pure profit.
K
Karthik V
Cutting losses from 180 billion to 110 billion is still a loss! The industry needs to become profitable to be truly sustainable. Maybe time to rethink some of the ultra-low-cost models that lead to constant cost-cutting on maintenance and staff?

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