The Indian aviation industry is currently going through a difficult situation. The total losses of the country’s airlines in the current financial year are expected to increase to Rs 36,000 crore-38,000 crore. This alarming information has come to light in a recent report released by the leading domestic credit rating agency ‘ICRA’. This revised estimate compared to the earlier estimated losses has broken the backbone of the aviation industry.
Main reasons for the deterioration of the situation:
According to the agency’s analysis, not one but several adverse factors have come together to put pressure on the airlines. The most prominent of them is the continuous depreciation of the Indian rupee against the dollar in the international market, which has increased the foreign expenses of the companies. The price of turbine fuel used for aviation has increased drastically, which is the largest part of the operating costs. Most of the aircraft used by Indian companies are leased or rented. Now the cost of this lease has also increased significantly. International air traffic has been disrupted due to the war situation that started in the Middle East since late February 2026. This has directly affected the Indian aviation sector adversely.
‘ICRA’ changes its previous estimate:
Earlier, ICRA, estimating for the financial year 2026-27, had said that the aviation industry could suffer a loss of about Rs 11,000 to 12,000 crore this year. However, in view of the changing geopolitical situation and the market slowdown in the last few months, the agency has been forced to revise its estimate. Now it has been clarified that this loss limit will be almost three times higher than earlier. It is not possible for airlines to pass on the full burden on passengers by increasing ticket prices at the same rate as the operating costs of airlines are increasing. If the ticket prices are increased too much, then there is a fear of further decline in passenger numbers. In the current situation, both domestic and international passenger traffic growth is expected to remain very slow.
With the ongoing unrest in the Middle East, passengers are less interested in international travel, and balancing the increased costs has become the biggest challenge for airlines. Economic analysts have expressed the view that if the crude oil price in the international market does not decrease in the coming days or the currency situation is not normalized, then this economic crisis may further intensify.
