Mumbai: Domestic air travel in India continued to expand in October 2025, with passenger numbers rising 4.5 per cent year-on-year to 14.28 million, according to the latest assessment by ICRA Limited. The increase was supported by a healthy passenger load factor of 84.7 per cent, reflecting strong demand despite a series of operational and financial challenges that have weighed on the sector. Capacity deployment also edged higher, with airlines scheduling 1.7 per cent more flights than the same month last year, underscoring their efforts to meet demand even as grounded aircraft constrained overall fleet strength.
The broader outlook for the financial year remains stable, with ICRA projecting domestic traffic growth in the range of 4–6 per cent. International travel is expected to expand more robustly, at 13–15 per cent, driven by sustained demand for overseas routes. Yet these gains are tempered by the industry’s financial position. Net losses are forecast to widen to between ₹95 billion and ₹105 billion in FY2026, compared with an estimated ₹55 billion in FY2025. Rising aviation turbine fuel (ATF) prices – up 4.4 per cent year-on-year in November 2025 – have squeezed margins, while the weakening of the rupee against the dollar has amplified foreign exchange losses, much of which remain unrealised but nonetheless weigh heavily on balance sheets.
Operational hurdles have further complicated the picture. Around 133 aircraft were grounded as of March 2025 due to supply chain disruptions and engine failures, particularly linked to Pratt & Whitney engines. This represented 15–17 per cent of the total industry fleet, reducing available capacity and forcing airlines to rely on costly wet leases and older aircraft with lower fuel efficiency. Although some compensation has been provided by engine manufacturers, the financial strain of maintaining operations under these conditions has been significant. The grounding of aircraft has also led to higher lease rentals and increased operating expenses, eroding the benefits of strong passenger demand.
The industry’s resilience is evident in its ability to sustain traffic growth despite these pressures. However, the balance between demand and cost remains precarious. As Kinjal Shah, Vice President at ICRA, noted in the report, “Healthy yields and high passenger load factors are helping to absorb the impact to an extent, but the structural challenges of rising costs and supply chain constraints continue to weigh on the sector.” The interplay between passenger traffic trends and industry challenges highlights the fragile equilibrium in which Indian aviation currently operates – one where growth is possible, but profitability remains elusive.
