Indian aviation industry outlook stable, disruptions temporary: Report

New Delhi: The outlook on the Indian aviation industry is “stable,” driven by the anticipation of modest growth in domestic air passenger traffic in FY26, according to an ICRA report on Thursday. ICRA has revised its forecasts for the domestic air passenger traffic growth in FY26 to 0-3 per cent, reaching 165-170 million, lower than its previous expectations of 4-6 per cent on a YoY basis.

This is attributed to cross-border escalations (that led to flight disruptions and cancellations earlier during the year); the aircraft accident tragedy in June 2025 that made travellers hesitant, at least during the period immediately post the accident; the impact on business travel owing to the headwinds stemming from US tariffs; and the impact of operational disruptions at IndiGo from December 3, 2025 to December 8, 2025, resulting in around 4,500 flight cancellations.

However, ICRA maintained its Stable outlook on the industry as these disruptions are expected to be temporary, with ICRA’s growth forecast for FY2027 remaining unchanged at 6-8 per cent, although the low base of FY2026 would mean lower-than-earlier projected domestic air passenger traffic (175-182 million in FY2027 as per revised forecasts, against 179-186 million projected earlier).