Ratings agency ICRA in its latest report has said that Indian aviation industry’s net loss is likely to reduce to Rs 11,000 crore -12,000 crore in the next financial year (FY27) from a projected Rs 17,000 crore-18,000 crore in FY26, led by growth in domestic air passenger traffic and expected normalisation of operations post disruptions seen in 2025-26 that had resulted in flight cancellations and passenger refunds.

ICRA said domestic air passenger traffic is expected to grow by 6-8 per cent, reaching around 175-179 million passengers in FY27. In December 2025, ICRA had 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. ICRA has maintained a ‘stable outlook’ for the Indian aviation industry, supported by expectations of modest growth in domestic air passenger traffic and a gradually improving operating environment, despite near-term challenges.

According to the report, the international air passenger traffic growth for Indian carriers is expected to remain relatively stronger, aided by low base effect, expanding e-visa/visa-on-arrival coverage, and the Central Government's focus on developing theme-based and iconic tourist destinations. It said the international air passenger traffic is seen growing at 7-9 per cent for this financial year and 8-10 per cent next year, and added that the current fiscal year has seen a period of modest domestic air passenger traffic growth due to cross-border escalations, weather-related disruptions, travel hesitancy following the June 2025 aircraft accident, the impact on business travel owing to the headwinds stemming from elevated US tariffs and operational disruptions at IndiGo in December 2025.