Indian Aviation Faces Financial Turbulence: Losses to Soar in FY2026

India's aviation sector is heading into financial headwinds as ICRA forecasts net losses between Rs 95-105 billion for FY2026. This marks a significant rise from the Rs 55 billion recorded in FY2025, with factors such as subdued passenger growth, increased aircraft deliveries, and escalating operational costs playing a crucial role.

Aviation turbine fuel (ATF) remains a substantial cost factor, with a sequential increase of 3.3% in October 2025. Though fuel prices averaged Rs 95,181 per kilolitre in FY2025, lower than the previous year, ongoing volatility driven by currency fluctuations continues to impact financial stability.

Domestic air passenger traffic saw a decline in September 2025, falling to 128.5 lakh, a 1.4% decrease from September 2024. The sector faces constraints from grounded aircraft due to supply chain and engine issues and continues to balance the challenges of pilot shortages and surging lease rates. Despite these hurdles, the international segment shows recovery with a year-on-year increase of 7.8% in August 2025.