ICRA Projects Domestic Aviation Industry Losses of ₹36,000-38,000 Crore in FY27

NEW DELHI — The Indian domestic aviation industry is expected to face deeper financial strain, with ratings agency ICRA projecting net losses between ₹36,000 crore and ₹38,000 crore for the current fiscal year. This marks an increase from the estimated net losses of ₹28,000 crore to ₹30,000 crore recorded in the previous year.

According to ICRA, the widening losses are primarily driven by a moderation in passenger traffic growth, elevated aviation turbine fuel (ATF) prices, and foreign exchange losses resulting from the sharp depreciation of the Indian rupee against the US dollar.

The ratings agency noted that the onset of the war in West Asia in late February 2026 is expected to further dampen air passenger traffic growth throughout FY27.

Additionally, airline balance sheets will likely feel the pressure of increased operational costs. These include a rise in lease rentals amid continued aircraft deliveries and higher expenses stemming from currency depreciation. ICRA stated that carriers may find it challenging to fully pass these cost escalations on to passengers through fare hikes.

"The projected widening of losses in the domestic aviation sector highlights the vulnerability of capital-intensive businesses to macroeconomic shocks, currency fluctuations, and geopolitical conflicts. For entrepreneurs and businesses operating in travel, tourism, and related supply chains, this environment demands strict financial prudence and agile cost management. When operational costs like fuel and lease rentals rise faster than pricing power, businesses must focus intensely on optimizing their core efficiencies rather than relying on volume growth alone to sustain profitability." — Dr. Shishir Gupta, Founder & CEO, StartupLanes