Scissors for common people’s pockets? Air travel likely to become more expensive; ICRA warned of danger

• Air travel will be expensive?
• ‘ICRA’ issued a big alert about loss-making airlines!
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India’s aviation sector may face further heavy losses in the current financial year. Rating agency ‘ICRA’ has raised the estimated net loss figure of Indian airlines for the financial year 2026-27 (FY27) to between Rs 36,000-38,000 crore. A depreciation of the rupee, rising aviation fuel (ATF) rates, rising cost of aircraft leasing and a possible drop in passenger demand due to tensions in West Asia will put increasing pressure on airlines, the agency said.

The loss estimate tripled compared to the previous estimate

ICRA had earlier projected a loss of Rs 11,000-12,000 crore for airlines for the financial year 2026-27. However, the agency has increased this estimate to Rs 36,000-38,000 crore as the cost continues to rise. According to Iqra, the conflict in West Asia that started in late February 2026 is affecting air travel. This is likely to slow down the growth of domestic and international passenger traffic. Additionally, the depreciation of the rupee against the dollar has made aircraft leasing, maintenance and other payments made in foreign currency more expensive. At the same time, higher aviation fuel (ATF) prices have further increased operating costs for airlines.

The loss estimate for 2025-26 (FY26) has also been raised

ICRA has also revised its forecast for the financial year 2025-26 (FY26). The agency had earlier estimated a loss of Rs 17,000-18,000 crore, but has now raised the figure to Rs 32,000-34,000 crore. A sharp depreciation of the rupee, a rise in crude oil prices and lower-than-expected growth in passenger numbers are the reasons behind this improvement.

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A reduction in passenger traffic estimates as well

ICRA has lowered its domestic and international passenger traffic forecasts for the financial year 2026-27. Although the number of domestic passengers grew by 11.3% on a year-on-year basis to 1.56 crore (15.6 million) in May 2026, the agency lowered its domestic traffic growth forecast for the full year to 3-6% from 6-8%. Similarly, international passenger traffic is estimated to be reduced from 8-10% to 0-3%. Indian airlines’ international passenger numbers fell by 39% in April 2026 due to tensions in West Asia.

The challenge of rising fuel and lease costs

According to ICRA, Aviation Turbine Fuel (ATF) rates announced on June 1, 2026 were 26.9% higher than last year. Also, the average rate of ATF in the first quarter of FY 2027 was 22.8% higher than the same period last year. In addition, the arrival of new aircraft will increase the cost of leasing. Due to depreciation of the rupee against the dollar, costs related to aircraft leasing and maintenance are also likely to rise further. Still, airlines increased their flight capacity by 5.1% year-on-year in May 2026, and passenger load factor for domestic flights was recorded at 88.8%—an improvement over the previous year’s figures of 83.9% and 82% in April 2026.

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