Indian Aviation 2025-26: Riding Stable Skies and Turbulent Costs

The Indian aviation industry is set for stable growth in 2025-26, with domestic air passenger traffic expected to rise by 7-10%. However, airlines may face financial pressure due to high fuel costs and yield challenges. The sector anticipates net losses, but significantly lower than previous years.

The Indian aviation market is poised for stability in 2025-26, according to ICRA, which predicts moderate growth in domestic air passenger numbers—estimated at a 7-10% increase. A relatively steady cost environment is also foreseen.

Airlines, however, face pressure to keep yields solid while maintaining load factors. International passenger traffic for Indian carriers is expected to surge by 15-20% within the same timeframe. ICRA's report highlights critical monitoring of yields as fuel prices and currency fluctuations heavily impact cost structures.

Fuel costs, comprising roughly a third of airlines' expenses, alongside dollar-denominated costs, are major factors. As airlines consider fare hikes to counter rising input costs, ICRA predicts net losses between Rs 20-30 billion for 2024-26, compared to the previous Rs 235 billion and Rs 174 billion losses, despite facing supply chain and engine maintenance challenges.

(With inputs from agencies.)