ICRA expects the Indian aviation industry to report a net loss of Rs. 360- 380 billion in FY2027, significantly higher than its earlier forecast of Rs. 110-120 billion. This is owing to the adverse impact of the West Asia conflict, reflected in elevated ATF prices, depreciation of the INR against the USD and subdued passenger traffic growth. Industry capacity growth remains constrained by elevated aircraft grounding levels, driven by persistent engine-related issues, maintenance delays, and the impact of international capacity rationalisation following the West Asia conflict.

• ICRA forecasts the domestic air passenger traffic to grow by a modest 3-6% in FY2027, reflecting the adverse impact of the West Asia conflict on passenger demand and higher airfares.
  
• ICRA expects the Indian aviation industry to report a net loss of Rs. 360-380 billion in FY2027 compared to the net loss of Rs. 280-300 billion estimated for FY2026.
  

Exhibit: Domestic air travel penetration^