Domestic carriers losses may balloon to Rs 36,000-38,000 cr in FY27 on INR fall, increased costs: ICRA

Business To Business, Mumbai, 26^th June, 2026:   ICRA on Friday sharply revised upward its estimate for the net losses of Indian airlines, projecting the domestic aviation industry to incur losses of Rs 36,000-38,000 crore in FY27 due to rising operating costs and weaker traffic growth.
The ratings agency attributed the higher loss estimate to the depreciation of the Indian rupee against the US dollar, elevated aviation turbine fuel (ATF) prices and an expected increase in aircraft lease rentals as airlines continue to induct new aircraft into their fleets.
ICRA also downgraded its forecasts for both domestic and international passenger traffic for the current financial year, citing the impact of the conflict in West Asia. The agency said the geopolitical tensions have increased operating costs for airlines, leading to higher airfares and potentially reducing discretionary travel demand amid rising inflation.
According to ICRA, the combination of cost pressures and softer passenger growth is expected to weigh on the financial performance of airlines despite continued demand for air travel.
The agency also revised its outlook for FY2027. While it had earlier projected industry losses to narrow to Rs 11,000-12,000 crore on the back of stronger passenger traffic, it now expects a weaker recovery as higher costs and slower traffic growth continue to affect profitability.
The revised projections underscore the challenges facing India's aviation sector as carriers navigate volatile fuel prices, currency fluctuations, geopolitical uncertainties and sustained investment in fleet expansion.