India’s domestic air passenger traffic is projected to grow by 6-8% to reach 175-179 million passengers by 2026-27, according to ICRA. The agency also anticipates strong growth in international air passenger traffic for Indian carriers, supported by expanded e-visa coverage and government efforts to develop tourist destinations. Expected growth in international traffic is 7-9% for 2025-26 and 8-10% for 2026-27.
ICRA forecasts a reduction in the Indian aviation industry’s net loss to ₹110-120 billion in 2026-27, down from ₹170-180 billion in 2025-26. This improved outlook is based on a recovering operating environment, overcoming challenges such as cross-border conflicts, weather disruptions, and operational issues at IndiGo. Despite near-term obstacles, domestic air traffic growth remains steady.
Kinjal Shah, Senior Vice President & Co-Group Head at ICRA, highlights expected improvements in the industry’s debt metrics, with interest cover rising to 1.3-1.5 times in 2026-27 after a dip in 2025-26. Capacity additions have seen about a 4% increase with the fleet size at 865 aircraft by the end of 2025. Over 1,700 aircraft deliveries are pending, primarily aimed at replacing older models with more fuel-efficient ones, addressing issues such as engine failures and supply chain challenges.