India’s aviation industry could record net losses of ₹36,000 crore to ₹38,000 crore in the financial year 2026-27, up from an estimated ₹28,000 crore to ₹30,000 crore in the previous fiscal, ratings agency ICRA said on Thursday.
The projected increase reflects slower passenger traffic growth, higher aviation turbine fuel (ATF) prices and foreign exchange losses caused by the depreciation of the Indian rupee against the US dollar.
ICRA said the war in West Asia, which began in late February 2026, is expected to weigh on air passenger traffic growth during FY27. The conflict has added uncertainty to the operating environment for airlines already facing rising costs.
The depreciation of the rupee is increasing expenses linked to dollar-denominated payments, while elevated fuel prices are putting further pressure on operating costs. Airlines are also facing higher lease rentals as aircraft deliveries continue.
These pressures could widen industry losses even as airlines seek to manage expenditure and maintain passenger demand. ICRA said airlines may not be able to pass on the full increase in costs to passengers through higher airfares.
The outlook highlights the financial challenges facing Indian carriers as they contend with external economic pressures and the cost of expanding their fleets. Fuel is a major operating expense for airlines, making changes in ATF prices particularly significant for profitability. Currency depreciation can add to the burden because several aviation-related payments are linked to the US dollar.
The projected losses would represent a deterioration from the previous fiscal year’s estimated industry-wide deficit. The final outcome will depend partly on how fuel prices, currency movements and passenger demand evolve during the year.
ICRA’s forecast points to continued pressure on the sector’s finances in FY27, despite the long-term growth potential of India’s aviation market.
Source: Press Trust of India
