ICRA forecasts the Indian aviation industry to report a net loss of Rs. 95-105 billion in FY2026 (higher than the earlier expectations of Rs. 20-30 billion) over net losses of Rs. 55 billion estimated for FY2025. Losses are set to shoot up principally because passenger traffic growth will be slowing down amid a period of rising aircraft deliveries, as per an expanded sample set for ICRA.

The outlook for the Indian aviation industry remains Stable, driven by expectations of modest growth in domestic air passenger traffic in FY2026. While the overall passenger traffic has been steady, emerging geopolitical and operational headwinds warrant close monitoring for potential downside risks.

Exhibit: Share of various domestic markets in RPKMs in H1 CY2025