Indian aviation industry to report net loss of Rs 30 billion in FY26: ICRA

The firm said in a report that these losses are expected to continue compared to a net profit of around Rs 16 billion in FY2024 due to the anticipated pressure on yields as airlines strive to maintain adequate passenger load factors (PLF) amid continued aviation turbine fuel (ATF) prices.

The report stated that while demand for air travel remains robust, airlines are unlikely to raise ticket prices significantly due to competitive pressures and price sensitivity in the domestic market. This, coupled with costlier fuel, is expected to eat into profitability.

Adding to the financial strain, interest costs are likely to rise in FY26 due to growing lease liabilities, as several airlines have scheduled aircraft deliveries. The increased debt burden is expected to raise financing costs, further compressing margins.

Despite these challenges, the projected losses for FY26 are a marked improvement compared to the massive setbacks of the past. The industry had posted staggering net losses of Rs 235 billion in FY22 and Rs 174 billion in FY23, largely driven by COVID-19-related disruptions and fuel cost volatility.

Financial resilience, however, is slowly improving. The sector's interest coverage ratio, a key indicator of its ability to service debt, is expected to range between 1.5 and 2.0 times in FY26, suggesting relatively stable debt-servicing capacity even amid bottom-line pressures.

For June 2025, domestic air passenger traffic was estimated at 138.7 lakh, 5.1 per cent higher than 132.1 lakh in June 2024.

However, it witnessed a marginal decline of 1.3 per cent on a sequential basis. The airlines' capacity deployment in June 2025 was 4.9 per cent higher than June 2024; however, it was 2.3 per cent lower compared to May 2025.

For Q1 FY2026 (April-June 2025), domestic air passenger traffic was 422.4 lakh, reflecting a YoY growth of 5.1 per cent.

For May 2025, international passenger traffic for Indian carriers was 29.7 lakh, a YoY growth of 7.3 per cent. However, it remained lower by 7.9 per cent on a sequential basis owing to geopolitical headwinds.

For 2M FY2026, international passenger traffic for Indian carriers stood at 59.8 lakh, a YoY growth of 12.1 per cent.

For FY2025 (April 2024-March 2025), domestic air passenger traffic stood at around 1,653.8 lakh, a YoY growth of 7.6 per cent.

Further, for FY2025, international passenger traffic for Indian carriers stood at 338.6 lakh, a YoY growth of 14.1 per cent. (ANI)