Rankings company ICRA has minimize its progress tempo forecast for India’s aviation sector for FY26 with the domestic air travel market displaying little momentum in August 2025, underlined by flat passenger numbers as airways grappled with fuel costs, grounded plane and fragile shopper demand.
In keeping with ICRA, home passenger traffic was pegged at 131.7 lakh in August, barely above 131.3 lakh a yr earlier, although larger than July’s 126.1 lakh. For the April–August interval of FY26, visitors rose simply 2.2 per cent year-on-year to 677.5 lakh passengers. With demand subdued, capacity deployment in August was 5.8 per cent decrease than a yr in the past and largely unchanged from July.
The slowdown has prompted ICRA to chop its FY26 progress forecast for home visitors to 4–6 per cent, from an earlier 7–10 per cent. The scores company pointed to cross-border tensions, capability disruptions and lingering journey hesitancy after the June plane accident. “Whereas general passenger visitors has thus far held regular, ongoing geopolitical and operational headwinds warrant shut monitoring for potential draw back dangers,” ICRA mentioned.
Worldwide operations stay comparatively stronger. In July, Indian carriers flew 29.6 lakh passengers abroad, a 6.7 per cent improve from final yr and 6.8 per cent larger than June. For April–July, the overall was 117.3 lakh, up 10.2 per cent year-on-year. Even so, ICRA trimmed its FY26 worldwide progress estimate to 13–15 per cent from 15–20 per cent, citing security issues and regional tensions.
On the monetary entrance, airways are watching deeper losses. ICRA expects industry-wide web losses of INR 95,000–1,05,000 crore in FY26, virtually double FY25’s INR 55,000 crore. The pink ink stems from rising plane deliveries amid softening demand, international alternate pressures, and better lease leases. Gasoline, which accounts for 30–40 per cent of working prices, stays a drag regardless of some reduction: ATF costs averaged INR 95,181/KL in FY25, down 8 per cent year-on-year, and have fallen 10.2 per cent within the first 5 months of FY26.
Operational constraints add to the stress. Provide-chain points and Pratt & Whitney engine failures saved greater than 130 plane grounded as of March 2025, round 15–17 per cent of the {industry}’s fleet. Though the state of affairs has improved, airways proceed to rely upon pricey moist leases and face larger bills from lowered gas effectivity. Crew shortages have additionally led to cancellations and delays, additional testing passenger confidence.
ICRA has maintained a “Secure” outlook on the sector, citing regular yields and excessive load components which can be cushioning prices. However with visitors progress tapering, losses widening and international headwinds intensifying, India’s aviation {industry} is about for a yr of consolidation fairly than lift-off.
