India’s aviation industry is projected to report a net loss in the range of Rs 20–30 billion ($233–350 million) in the financial year 2025–26 (FY26), according to a report released by credit rating agency ICRA. The expected loss mirrors the estimated figures for FY2024–25 (FY25), signaling continued headwinds for profitability in the sector.
Despite sustained growth in passenger demand, the report highlights mounting challenges in maintaining healthy margins. Airlines are expected to face pressure on yields, as they are unlikely to raise fares significantly due to intense competition and high price sensitivity among domestic travelers. This comes even as aviation turbine fuel (ATF) prices remain elevated, eating into operating profits.
The financial strain is further compounded by rising interest costs, attributed to increasing lease liabilities from a wave of scheduled aircraft deliveries. This is expected to increase the debt burden and raise financing costs, further squeezing airline margins.
Still, the industry’s financial performance reflects a significant improvement compared to the deep losses sustained in the pandemic aftermath. Indian carriers had reported staggering net losses of Rs 235 billion ($2.74 billion) in FY2021–22 and Rs 174 billion ($2.03 billion) in FY2022–23, primarily driven by COVID-19-related disruptions and fuel price volatility.
According to ICRA, there are signs of growing financial resilience. The sector’s interest coverage ratio — a key metric of a company’s ability to service debt — is expected to improve to 1.5–2.0 times in FY26, indicating a more stable debt-servicing position even under profitability pressure.
Data for June 2025 domestic air passenger traffic, expected to be released shortly, will offer more clarity on the industry’s short-term trajectory.
