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Key Points

ICRA forecasts a 7-10% rise in India's domestic air traffic for FY26, maintaining a stable outlook. International travel is expected to grow even faster at 15-20%, though geopolitical tensions pose risks. The report notes steady pricing power but warns of rising operational costs. Despite challenges, passenger demand remains resilient, reflecting the sector's recovery.

Key Points: India Domestic Air Traffic to Grow 10% in FY26 Says ICRA Report

  • Domestic traffic projected at 7-10% growth in FY26
  • International traffic may rise 15-20% despite geopolitical risks
  • June 2025 traffic up 5.1% YoY to 138.7 lakh
  • Airlines face cost pressures from flight cancellations, tensions
2 min read

India's domestic air traffic likely to surge 10 pc in FY26: Report

ICRA predicts 7-10% domestic air traffic growth in FY26 with stable aviation outlook despite geopolitical risks.

"Domestic air passenger traffic growth tapered to 7.6% in FY2025, in line with ICRA's expectations. – ICRA Report"

New Delhi, July 11

India's domestic air passenger traffic is estimated to grow by a robust 7-10 per cent in FY26, according to an ICRA report released on Friday, which maintains a stable outlook for the country's civil aviation sector.

International passenger traffic for Indian carriers is expected to grow by 15-20 per cent in FY2026; however, it remains monitorable, given the recent geopolitical concerns, the report said.

For June 2025, domestic air passenger traffic was estimated at 138.7 lakh, 5.1 per cent higher than 132.1 lakh in June 2024. However, it witnessed a marginal decline of 1.3 per cent on a sequential basis.

The airlines' capacity deployment in June 2025 was 4.9 per cent higher than in June 2024.

For Q1 FY2026 (April-June 2025), domestic air passenger traffic was 422.4 lakh, reflecting a year-on-year growth of 5.1 per cent.

For May 2025, international passenger traffic for Indian carriers was 29.7 lakh, a year-on-year growth of 7.3 per cent.

For the first two months of FY2026, international passenger traffic for Indian carriers stood at 59.8 lakh, a year-on-year growth of 12.1 per cent, according to the ICRA report.

The operating costs for the Indian aviation industry are likely to have increased in the past couple of months due to flight cancellations and other operational challenges following the India–Pakistan tensions. Nevertheless, the overall passenger traffic and the pricing so far have remained steady, the report said.

ICRA's outlook on the Indian aviation industry is stable. However, emerging geopolitical and operational headwinds - in the form of rising crude oil prices (because of the Israel-Iran conflict), closure of the airspace over Iran and Pakistan (for Indian carriers), probable rise in insurance premia (after the recent aeroplane crash) and possible hesitation to travel - warrant close monitoring for potential downside risks, according to the report.

It also states that the aviation industry witnessed steady pricing power in FY2025, with stable yields. Domestic air passenger traffic growth tapered to 7.6 per cent in FY2025, in line with ICRA's expectations, given the high base of FY2024 and lower traffic in H1 FY2025, which was impacted by severe heatwaves and other weather-related disruptions, the report said.

- IANS

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Reader Comments

S
Shreya B
With more people flying, I hope the government will focus on improving airport infrastructure. The queues at major airports are already crazy long! Also, ticket prices need to be more affordable for middle-class families.
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Aman W
The geopolitical factors mentioned are concerning. Our airlines are already paying extra due to Pakistan airspace closure. Hope the government is working on alternative routes and fuel cost management. Jai Hind!
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Priya S
While growth is good, I'm worried about environmental impact. More flights = more pollution. Airlines should invest in sustainable aviation fuel and carbon offset programs. We can't ignore climate change while celebrating economic progress.
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Karan T
The 15-20% international growth projection is impressive! Shows how Indian carriers are competing globally. But service quality must match international standards - food, entertainment and staff behavior need improvement.
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Nisha Z
As someone who flies frequently for work, I've noticed flights are always full these days. The airlines should add more routes connecting tier-2 cities directly. Would reduce congestion at metro airports and boost regional connectivity.

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