Ratings agency ICRA in its latest report has sharply increased its estimate of net losses for Indian airlines to Rs 36,000-38,000 crore in the current fiscal (FY27), citing higher operating costs arising from the rupee's depreciation against the US dollar, elevated aviation turbine fuel (ATF) prices, and a likely increase in aircraft lease rentals as fleet expansion continues.
The agency has also lowered its projections for both domestic and international passenger traffic in FY27, pointing to the adverse impact of the West Asian conflict. According to ICRA, the conflict has pushed up airfares by increasing airline costs, while higher inflation is expected to curb discretionary travel demand. Earlier, the agency had projected airline losses to narrow to Rs 11,000-12,000 crore during FY27, supported by stronger passenger growth, but the outlook has since weakened significantly.
Moreover, ICRA noted that Indian aviation industry is estimated to have reported a net loss of Rs 32,000-34,000 crore in FY26 much higher than its earlier estimates of Rs 17,000-18,000 crore. The larger-than-expected losses were mainly driven by foreign exchange losses following the sharp depreciation of the rupee, slower-than-anticipated passenger traffic growth, and higher ATF prices amid the surge in crude oil prices triggered by the West Asian conflict towards the close of the previous fiscal. It said the onset of the West Asian conflict since the end of February 2026 is expected to result in subdued air passenger traffic growth in FY27.
