Multiple Disruptions Drag FY2026 Domestic Air Traffic Growth To 0–3%: ICRA

New Delhi, Dec 31 (KNN) India’s domestic air passenger traffic is expected to grow at a slower pace of 0–3 per cent in FY2026, significantly lower than the earlier projection of 4–6 per cent, amid multiple disruptions affecting travel demand, according to a report by rating agency ICRA.

The downward revision reflects a mix of operational challenges, geopolitical developments and weakened travel sentiment during the year. Domestic passenger traffic growth during the first eight months of FY2026 (April–November 2025) stood at 2.2 per cent year-on-year, falling short of earlier expectations, the report said, reported ANI.

Disruptions and Sentiment Weigh on Demand

ICRA attributed the slower growth primarily to cross-border escalations earlier in the year, which led to flight disruptions and cancellations, dampening travel plans and passenger movement during certain periods.

Another key factor was the aircraft accident in June 2025, which temporarily affected traveller confidence. According to the report, passengers remained hesitant in the immediate aftermath of the incident, resulting in a short-term dip in air travel demand.

In addition, headwinds from US tariffs impacted business travel, further weighing on domestic passenger traffic during FY2026.

Operational Issues Add Pressure

The report also flagged operational disruptions at IndiGo between December 3 and December 8, 2025, which led to around 4,500 flight cancellations. 

While these accounted for only about 0.4 per cent of total annual industry departures, ICRA said travel sentiment could remain somewhat subdued in the near term following the episode.

Outlook Remains Stable Despite Near-Term Impact

Despite the challenges, ICRA maintained a stable outlook for the domestic aviation industry, noting that the disruptions are expected to be temporary. The agency retained its domestic air passenger traffic growth forecast for FY2027 at 6–8 per cent.

However, it cautioned that the lower base in FY2026 would result in reduced passenger volumes in FY2027 compared with earlier estimates. Domestic air traffic is now projected to reach 175–182 million passengers in FY2027, revised down from the earlier forecast of 179–186 million.

International Traffic Growth Also Revised Down

On the international front, ICRA lowered its growth forecast for international air passenger traffic for Indian carriers in FY2026 to 7–9 per cent, from the earlier estimate of 13–15 per cent.

Overall, the report said that while near-term growth has been affected by multiple disruptions, the medium-term outlook for the aviation sector remains stable, with recovery expected as these temporary factors ease.

(KNN Bureau)