- Indian aviation industry expected to report Rs 17,000-18,000 crore loss in FY 2025-26, ICRA says
- ICRA revised industry outlook to negative citing airspace disruptions and rising fuel and currency costs
- IndiGo faced major losses from cancellations, refunds, and higher operational expenses in early Dec 2025
With the ongoing crisis in the Middle East, the Indian aviation industry is expected to report a net loss of Rs 17,000-18,000 crore in financial year 2025-26, according to a report by ICRA.
The ratings agency has revised its outlook for the Indian aviation industry to "negative" from "stable" due to disruptions in the availability of international airspace, starting Feb. 28, 2026, following the escalation of the geopolitical conflict, along with a depreciation of the Indian rupee against the US dollar and a hike in aviation turbine fuel prices.
The major contributing factor towards the aviation industry's headwind is IndiGo's losses, stemming from the financial impact of flight cancellations, passenger refunds, and increased operating expenses due to the operational disruptions experienced in the first week of December 2025. Additionally, the weakening of the rupee resulted in airlines reporting large foreign exchange losses during the same period. The losses have also broadened due to a slowdown in passenger traffic growth.
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Before the Middle East conflict, ICRA had projected net losses to narrow to Rs 11,000-12,000 crore in the fiscal year 2026-27, supported by growth in passenger traffic. However, the ongoing conflict since the end of February 2026 resulted in flight cancellations, rerouting for select international routes, increasing fuel burn, and higher costs due to additional airport charges as more aircraft remain on ground.
Also, an increase in fuel cost due to the high crude oil prices poses further downward risk to the net loss estimates.
Additionally, the removal of price caps on air fares, introduced by the Directorate General of Civil Aviation (DGCA) in December 2025, indicates further downside risks to passenger traffic growth as demand for air travel may reduce if air fares go up significantly.
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