ICRA forecasts the domestic air passenger traffic growth at 6-8% in FY2027, higher than ICRA’s estimate of 0-3% in FY2026. In December 2025, ICRA had revised its forecasts for the domestic air passenger traffic growth in FY2026 to 0-3%, reaching 165-170 million, lower than its previous expectations of 4-6% on a YoY basis. This was in view of cross-border escalations (that led to flight disruptions and cancellations earlier in the year), dampened sentiments following the aircraft accident tragedy in June 2025, business headwinds due to US tariffs, and the impact of operational disruptions at IndiGo in the first week of December 2025. Domestic passenger traffic growth is likely to regain its normal trend in the next fiscal.

Exhibit: RPKM growth of domestic vs developed economies