India's Aviation Industry: Events, including the deadly Air India crash in June, flight cancellations earlier this month due to the severe IndiGo crisis, India-Pakistan conflict in May, and depreciation of the Indian currency against the US dollar, can result in Rs 170-Rs 180 billion loss to the Indian aviation industry in the current financial year (FY25-26).

ICRA, in its revised prediction, said that the domestic air passenger traffic would grow at 0-3 per cent in FY26 as compared to its earlier projection of 4-6 per cent.

Earlier, the rating agency had projected the loss at Rs 95-Rs 105 billion.

Aviation Industry's  Growth Remained Slow

This adjustment reflects lower-than-expected traffic growth during the first eight months of fiscal year 2026, due to cross-border tensions and the tragic Air India plane crash in June of this year, which caused a reluctance to travel, at least in the immediate aftermath.

Additionally, the impact on business travel was due to difficulties arising from US tariffs and operational disruptions at IndiGo between December 3 and 8, 2025, resulting in the cancellation of approximately 4,500 flights.

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“While the IndiGo flight cancellations accounted for only about 0.4 per cent of the total annual industry departures, ICRA expects the travel sentiments to dampen in the aftermath of the IndiGo episode. ICRA has also revised its international air passenger traffic growth forecast for Indian carriers for FY2026 to 7-9 per cent from its earlier projection of 13-15 per cent,” the rating agency mentioned.

Air Passenger Traffic Grows

The rating agency, in its latest prediction, stated that domestic air passenger traffic for November 2025 was estimated at 154.5 lakh, up 8.4 per cent compared to 142.5 lakh in the same month a year ago. Month-on-month, it surged 10.1 per cent from 140.3 lakh in October 2025.

“For 8M FY2026 (April-November 2025), domestic air passenger traffic was 1,096.5 lakh, reflecting a YoY growth of 2.2 per cent,” said the report.

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Meanwhile, according to the report, the international passenger traffic for Indian Airlines stood at 29.9 lakh in October, showing a YoY growth of 8.3 per cent.

“For 7M FY2026 (April-October 2025), international passenger traffic for Indian carriers stood at 205.5 lakh, a YoY growth of 9.0 per cent,” the report stated.

(With inputs from agencies)