Will India's Aviation Sector's Loss Surpass Rs 9,500 Crore Mark? - Report

The domestic aviation industry's net losses are projected to nearly double to Rs 9,500 to Rs 10,500 crore in the current fiscal ending March next year, as a result of moderating passenger growth and higher costs due to aircraft deliveries, as per a report.

However, rating agency ICRA maintained a “stable outlook ”and projected “4-6% growth in dometic passenger traffic” in the ongoing fiscal year.

"The Indian aviation sector is projected to report a wider net loss of INR 95-105 billion in FY2026, compared to an estimated loss of INR 55 billion in FY2025. The deterioration is linked to moderating passenger growth, coupled with higher deliveries of aircraft, which increase capital and operational expenses. Icra forecasts the industry's interest coverage ratio to range between 1.5 and 1.7 times for FY2026," according to the report.

The credit rating agency also pointed out that the forseen losses  stand lower than Rs 21,600 crore reported in FY22 and Rs 17,900 crore in FY23.

In the previous fiscal year, the passenger traffic growth was 7.6 per cent, which meant a  total passenger volumes of 16.53 crore.

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However, the report said, growth prospects for the current fiscal year are expected to remain moderate due to cross-border tensions, global disruptions, travel hesitancy post the June 2025 aircraft tragedy and recent disruptions related to air traffic control operations.

In October, domesti air passenger traffic is estimated to have surpassed the 1 crore mark, signalling a year-on-year grwoth of 4.5%.

"This momentum in travel demand was supported by an expansion in capacity, with domestic departures reaching approximately 99,816 during October, representing a sequential increase of 10.8 per cent and a 1.7 per cent rise year-on-year," the report said.

However," supply chain bottlenecks and engine failure-related aircraft groundings also continue to hit the industry," it said.