India's domestic air traffic likely to surge 10 pc in FY26: Report

New Delhi, July 11 (IANS) India's domestic air passenger traffic is estimated to grow by a robust 7-10 per cent in FY26, according to an ICRA report released on Friday, which maintains a stable outlook for the country's civil aviation sector.

International passenger traffic for Indian carriers is expected to grow by 15-20 per cent in FY2026; however, it remains monitorable, given the recent geopolitical concerns, the report said.

For June 2025, domestic air passenger traffic was estimated at 138.7 lakh, 5.1 per cent higher than 132.1 lakh in June 2024. However, it witnessed a marginal decline of 1.3 per cent on a sequential basis.

The airlines' capacity deployment in June 2025 was 4.9 per cent higher than in June 2024.

For Q1 FY2026 (April-June 2025), domestic air passenger traffic was 422.4 lakh, reflecting a year-on-year growth of 5.1 per cent.

For May 2025, international passenger traffic for Indian carriers was 29.7 lakh, a year-on-year growth of 7.3 per cent.

For the first two months of FY2026, international passenger traffic for Indian carriers stood at 59.8 lakh, a year-on-year growth of 12.1 per cent, according to the ICRA report.

The operating costs for the Indian aviation industry are likely to have increased in the past couple of months due to flight cancellations and other operational challenges following the India–Pakistan tensions. Nevertheless, the overall passenger traffic and the pricing so far have remained steady, the report said.

ICRA's outlook on the Indian aviation industry is stable. However, emerging geopolitical and operational headwinds - in the form of rising crude oil prices (because of the Israel-Iran conflict), closure of the airspace over Iran and Pakistan (for Indian carriers), probable rise in insurance premia (after the recent aeroplane crash) and possible hesitation to travel - warrant close monitoring for potential downside risks, according to the report.

It also states that the aviation industry witnessed steady pricing power in FY2025, with stable yields. Domestic air passenger traffic growth tapered to 7.6 per cent in FY2025, in line with ICRA's expectations, given the high base of FY2024 and lower traffic in H1 FY2025, which was impacted by severe heatwaves and other weather-related disruptions, the report said.

--IANS

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