Provided Indigo and Air India behave, Indian aviation is set to put the dark clouds of last year behind it to see a spurt in overall growth this coming financial year. According to a projection by ICRA, domestic travel is expected to recover to up to 8 per cent.
The 2025-26 financial year was a nightmare of sorts for Indian aviation. The bright growth prospects were hit by two debilitating whammies — summer’s Air India Dreamliner crash in Ahmedabad, leading to hesitancy to fly amongst many travellers, followed by market leader Indigo’s meltdown in the winter, following the pilot duty timings coming into effect. Both cases, in addition to additional factors like Operation Sindoor in April-May, the uncertain economic climate, headwinds emerging from the US tariffs on businesses, as well as the increased penetration of superfast trains like Vande Bharat, meant air travel’s rosy projections went for a toss.
For example, ICRA had predicted up to 6 per cent growth originally for 2025-26, but then it was revised to 0-3 per cent considering these factors. This has also meant that losses are piling up. 2025-26 is expected to see losses upto 180 billion rupees, compared to the estimated net loss of 55 billion the year before.
However, if all goes well, Indian aviation could be back to its booming self in the coming year, according to ICRA. It has projected a growth of up to 8 per cent for domestic travel, while international travel is expected to maintain its consistent momentum of 9 per cent presently to hit 10 per cent next financial year. ICRA attributes this to a low base effect, expanding e-visa/visa-on-arrival coverage and the government’s focus on developing theme-based tourist destinations.
If domestic travel improves, that would mean the mounting losses could also come down, likely to around Rs 110 billion next year. “ICRA has maintained a stable outlook for the Indian aviation industry, supported by expectations of modest growth in domestic air passenger traffic and a gradually improving operating environment, despite near-term challenges,” said Kinjal Shah, senior vice president & co-group head, ICRA.
Of course, even the best-laid plans could go awry if aviation turbine fuel (ATF) prices go haywire, like, say, if there is a flare-up between Iran and the US in the Persian Gulf, for instance. Fuel costs account for 30—40% of an airline’s operating expenditure. One of the reasons that has been a redeeming factor for Indian aviation has been the fact that ATF prices have remained steady in the past couple of years. While the depreciation of the Indian Rupee was a materially disruptive factor in isolation, since it affects not just the cost of fuel but also lease payments, aircraft and engine maintenance costs and debt servicing, that would all be nothing compared to the sort of emergency a war in West Asia could mean.
