Flying Higher, Earning Less—India’s Airlines Brace for a Mixed FY26

Image Source: Mint

India’s domestic aviation sector is expected to grow 7–10% in FY2026, reaching 175–181 million passengers, according to ICRA’s latest outlook. This follows a 7.6% rise in FY2025, which saw traffic hit 165.4 million, surpassing preCovid levels by nearly 17%. However, despite the passenger surge, the industry is projected to post net losses of ₹20,000–30,000 crore in FY2026.

Key Highlights:

Passenger Growth: Domestic air traffic rose 4.1% YoY in May 2025, with 143.6 lakh passengers, while April saw a 10.2% jump.
Capacity Expansion: Airlines increased capacity by 5.1% YoY in May, operating over 98,000 flights.
Load Factor & Pricing: The Passenger Load Factor (PLF) stood at 88%, slightly down from last year. Yields may come under pressure as airlines strive to maintain PLFs amid rising costs.
Cost Pressures: Elevated aviation turbine fuel (ATF) prices, lease liabilities, and interest expenses continue to weigh on profitability.
Operational Challenges: Enginerelated groundings, crew shortages, and airspace restrictions over Iran and Pakistan have added to the turbulence.
International Outlook: Indian carriers are expected to see 15–20% growth in international traffic in FY2026, building on a 14.1% rise in FY2025.

While demand remains strong, the sector’s financial health hinges on cost control, fleet availability, and pricing discipline. The skies may be busy—but the bottom line is still in recovery mode.

Sources: Business Today, The Tribune, Economic Times