Domestic airlines' operating profit to decline 10-15 pc in FY27: Report

Business 17 Jun, 2026

Domestic airlines' operating profit to decline 10-15 pc in FY27: Report

Business To Business, New Delhi, 17^th June, 2026: The operating profitability of Indian airlines is expected to come under pressure in FY 2026-27, with CRISIL Ratings estimating a 10-15% decline in operating profit due to higher costs and geopolitical disruptions.
According to the rating agency:

Aggregate operating profit of domestic airlines is expected to fall to ₹16,000-17,000 crore this fiscal.
This compares with approximately ₹19,000 crore in FY 2025-26.
The decline reflects a combination of rising costs and limited ability to pass those costs on to passengers.

1. Higher Aviation Turbine Fuel (ATF) prices
Fuel remains the largest operating expense for most airlines. Rising crude oil prices, partly linked to tensions in West Asia, have pushed up ATF costs.
2. Airspace restrictions
Regional conflicts have forced airlines to modify flight paths, resulting in:

Longer routes.
Higher fuel consumption.
Increased operational complexity.

3. Rupee depreciation
A weaker rupee raises costs because many airline expenses—including aircraft leases, maintenance contracts, and insurance—are denominated in US dollars.
4. Capacity rationalisation
Airlines continue to face aircraft availability challenges and are adjusting capacity deployment, which can affect revenue growth and profitability.
CRISIL noted that while costs are rising, airlines may find it difficult to increase fares significantly because of competitive pressures and demand sensitivity in the market.
The agency indicated that a reduction in tensions in West Asia could ease pressure on the industry by:

Lowering jet fuel prices.
Stabilizing crude oil markets.
Reducing operational disruptions caused by airspace restrictions.

Despite the expected decline in profits, the Indian aviation sector continues to benefit from:

Strong passenger demand.
Expanding domestic air travel.
Growth in regional connectivity.
Long-term fleet expansion plans by major carriers.

However, profitability in FY27 is likely to depend heavily on fuel costs, currency movements, and the geopolitical situation in West Asia.

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Domestic airlines' operating profit to decline 10-15 pc in FY27: Report

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Domestic airlines' operating profit to decline 10-15 pc in FY27: Report

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