Domestic aviation industry may post losses of INR 36,000-38,000 Cr in FY27: ICRA
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Growth in domestic air passenger traffic is estimated to be in the range of 6-8% in FY2027, however, the same is subject to downside risks if air fares see a significant spike, resulting in lower demand for air travel.
ICRA expects the Indian aviation industry to report a net loss of INR 170- 180 billion in FY2026. Earlier, ICRA had projected the net losses to narrow to INR 110-120 billion in FY2027 owing to growth in passenger traffic. However, initiation of the West Asian conflict since the end of February 2026 and its consequent impact on the INR and fuel costs (though the impact was moderated by the calibrated hikes in ATF prices by the Government of India) now pose a downward bias to the FY2027 net loss estimates.
Growth in domestic air passenger traffic is estimated to be in the range of 6-8% in FY2027, however, the same is subject to downside risks if air fares see a significant spike, resulting in lower demand for air travel.
Domestic air passenger traffic was estimated at 140.8 lakh in April 2026, 1.6% lower than 143.1 lakh in April 2025 and 2.0% lower
than 143.7 lakh in March 2026. The airlines’ capacity deployment in April 2026 was 0.6% lower than April 2025 and 1.4% lower than
March 2026. In FY2026, domestic air passenger traffic stood at 1,677.4 lakh, reflecting a year-on-year (YoY) growth of 1.4%, in line with ICRA’s estimates of 0-3%. The international air passenger traffic for Indian carriers grew by 3.9% to 350.0 lakh in FY2026, lower than ICRA’s estimate of 7-9% (drawn prior to the initiation of the West Asian conflict).
ATF prices announced on May 1, 2026, were kept unchanged for domestic routes, while ATF prices for international operations were increased moderately by 5.3% on a sequential basis. Further, on May 5, 2026, the Government approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 worth INR 5,000 crore to provide targeted support to the aviation sector by addressing near-term liquidity constraints and improving access to credit. The scheme enables scheduled passenger airlines to avail additional funding, with credit guarantee coverage of 100% and borrowing limits of up to 20% of peak working capital utilised during Q4 FY2026 (capped at INR 1,500 crore per airline).
ICRA’s net loss estimates (drawn prior to the initiation of the West Asian conflict) for the Indian aviation industry for FY2026 stood at around INR 170-180 billion, stemming from a slowdown in passenger traffic growth amid a period of rising aircraft deliveries, IndiGo’s elevated losses were reportedly caused by the financial impact of flight cancellations, passenger refunds and increased operating expenses due to the operational disruptions experienced in the first week of December 2025, and the weakening of the INR against the USD since Q2 FY2026, which resulted in airlines reporting large foreign exchange losses.
The highest single-day traffic of 5,38,429 was recorded on November 23, 2025, surpassing the historical level as passenger travel surged. In April 2026, the average daily departures were around 3,253, largely in line with around 3,274 in April 2025, but higher by 1.9% compared to around 3,193 in March 2026. The average number of passengers per flight was 144 in April 2026, largely in line with 146 in April 2025 and 145 in March 2026. It is estimated that the domestic aviation industry operated at a PLF of 85.9% in April 2026 vis-à-vis 86.8% in April 2025 and 83.4% in March 2026.
