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A report said that the net loss of the domestic aviation industry is expected to almost double to Rs 9,500 to Rs 10,500 crore in the current financial year ending in March next year. The main reasons for this loss could be slow growth in the number of passengers and increased costs due to delivery of aircraft. Rating agency ICRA, while maintaining a stable outlook and estimating 4-6 percent growth in domestic passenger traffic in FY26, said that the financial performance of the airline industry is expected to remain under pressure.
How much loss is estimated?
The report said that the Indian aviation sector is expected to suffer a comprehensive net loss of Rs 95-105 billion in FY 2026, while the estimated loss is Rs 55 billion in FY 2025. This decline is related to slow growth in passenger numbers and increased deliveries of aircraft. Due to which there has been an increase in capital and operational costs. ICRA estimates that the interest coverage ratio of the industry for FY 2026 will be between 1.5 to 1.7 times. The agency also said that the expected deficit is much lower than Rs 21,600 crore and Rs 17,900 crore recorded in FY 2022 and FY 2023 respectively. In the last financial year, passenger traffic growth was 7.6 percent, i.e. the total number of passengers was 16.53 crore.
How much is air passenger traffic?
However, the report said that growth prospects in the current financial year are expected to be moderate due to cross-border tensions, global disruption, travel hesitancy after the June 2025 plane crash and recent disruptions related to air traffic control operations. In October, domestic air passenger traffic is estimated to reach 1.43 crore, a year-on-year increase of 4.5 per cent and a sequential increase of 12.9 per cent compared to September. The report said this momentum in travel demand was bolstered by expansion in capacity, with domestic departures reaching approximately 99,816 during October, representing growth of 10.8 per cent sequentially and 1.7 per cent year-on-year.
133 planes are grounded
Supply chain disruptions and grounding of aircraft related to engine failure are also affecting the industry. The report said that as of March 31, 2025, around 133 aircraft of select airlines were grounded, which is 15-17 percent of the total industry fleet. These operational disruptions have led to increased costs, including idle expenses, higher lease rent for replacement aircraft, and reduced fuel efficiency.