ICRA Projects Nearly ₹38,000 Crore Loss for Indian Airlines

Rating agency ICRA has revised its forecast for the Indian aviation sector, now expecting combined losses of ₹36,000–38,000 crore this fiscal year.  

This shift is fuelled by the depreciation of the Indian rupee, rising jet fuel costs, and geopolitical tensions that have affected demand. 

Higher Loss Forecast on Indian Airlines 

The expected combined net loss of ₹36,000–38,000 crore is a marked increase from prior forecasts. Key factors driving this revision include currency depreciation, elevated jet fuel prices, and rising aircraft lease costs.  

The airline sector faces additional challenges from geopolitical stresses in West Asia, leading to disrupted air traffic and higher fares. 

Impact of Rising Costs on Indian Airlines 

A surge in operating expenses is exacerbating the loss situation for airlines. With the rupee weakening against the US dollar, airlines are grappling with increased foreign exchange losses. Additionally, the price of aviation turbine fuel remains high due to crude oil market volatility. 

Read More: Crude Oil Drops 22% in 1 Month: OMC, Aviation and Tyre Sectors in Focus! 

Sluggish Passenger Growth 

The sector is also experiencing a shortfall in expected passenger numbers. Domestic traffic is now projected to grow by 3-6%, down from the earlier forecast of 6-8%. For international travel, growth estimates have been significantly reduced from 8-10% to 0-3%, due to the effects of regional conflicts. 

Traffic and Cost Pressures in May 2026 

Although May 2026 saw an 11.3% year-on-year rise in traffic, this was primarily due to a low base from the previous year's disruptions.  

International traffic, however, declined by 39% in April 2026. Despite higher fleet utilisation and an 88.8% load factor in May, the cost pressures are expected to keep profitability constrained. 

Conclusion 

The Indian aviation sector is set to report losses of ₹36,000–38,000 crore this fiscal, influenced by the rupee's depreciation, higher fuel costs, and geopolitical tensions. Domestic passenger growth has been adjusted to 3-6%, and international growth is now 0-3%. 

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