Aviation Losses To Hit Rs95–105 Billion In FY26: Icra

Icra estimates the industry’s net loss will widen from roughly Rs55 billion in FY25 due to moderating demand and higher capital and operating expenditure. The industry’s interest coverage ratio is projected to remain between 1.5 and 1.7 times. Even so, the expected losses are significantly lower than the sharp losses of Rs216 billion and Rs179 billion recorded in FY22 and FY23.

Domestic passenger traffic grew 7.6 per cent last fiscal, reaching 165.3 million travellers. However, growth this year is expected to remain subdued owing to cross-border tensions, global disruptions, travel hesitancy following the June 2025 aircraft crash, and recent air traffic control-related issues. In October, domestic air traffic is estimated at 14.3 million passengers, an increase of 4.5 per cent year-on-year and 12.9 per cent compared with September.

The rise was aided by increased capacity, with domestic departures reaching 99,816, marking a 10.8 per cent sequential increase and a 1.7 per cent rise year-on-year. Nonetheless, the sector continues to grapple with supply chain challenges and widespread aircraft groundings caused by engine failures. As of 31 March 2025, approximately 133 aircraft across major airlines were grounded, representing 15–17 per cent of the total fleet.

These constraints have pushed up expenses through grounding costs, higher lease rentals for replacement aircraft, and reduced fuel efficiency.