Factors such as the India-Pakistan conflict in May, the Air India crash in June, recent flight cancellations due to an IndiGo crisis, and the rupee’s depreciation against the US dollar may lead to a significant loss of Rs 170-180 billion for the Indian aviation sector in the current fiscal year. This projection surpasses earlier estimates of Rs 95-105 billion, as per a report.
ICRA, a rating agency, has adjusted its forecast for domestic air passenger traffic growth in FY26 to 0-3 percent, down from the previous estimate of 4-6 percent. This revision is based on a slower-than-expected traffic growth over the past eight months, influenced by various events impacting the industry.
The slowdown in traffic growth is attributed to factors such as cross-border tensions leading to flight disruptions, the impact of a tragic aircraft accident in June 2025, and challenges in business travel due to US tariffs. Additionally, operational issues at IndiGo in early December 2025 resulted in around 4,500 flight cancellations, affecting overall travel sentiments.
Despite IndiGo’s cancellations accounting for a small percentage of total annual industry departures, ICRA anticipates a negative impact on travel sentiments following the incident. The agency has also revised its forecast for international air passenger traffic growth for Indian carriers in FY2026 to 7-9 percent, down from the earlier projection of 13-15 percent.
In November 2025, domestic air passenger traffic reached an estimated 154.5 lakh, marking an 8.4 percent increase from the same period in 2024. For the period of April-November 2025, domestic air passenger traffic saw a year-on-year growth of 2.2 percent, totaling 1,096.5 lakh passengers.
International passenger traffic for Indian carriers in October 2025 stood at 29.9 lakh, showing a year-on-year growth of 8.3 percent and a sequential growth of 6.0 percent. From April to October 2025, international passenger traffic for Indian carriers reached 205.5 lakh, reflecting a year-on-year growth of 9.0 percent.
