New Delhi, July 12 (KNN) India’s aviation industry is projected to record a net loss between Rs 20,000 crore and Rs 30,000 crore in the financial year 2025–26 (FY26), broadly mirroring the estimated losses for FY2024–25 (FY25), according to a report by credit rating agency ICRA. The subdued outlook comes despite a recovery in air travel demand. ICRA attributed the continued losses to sustained pressure on yields, as airlines are expected to keep ticket prices competitive in a price-sensitive domestic market to maintain healthy passenger load factors (PLFs). High aviation turbine fuel (ATF) prices and rising interest costs—driven by increased aircraft lease liabilities—are further expected to weigh on airline margins. “While passenger traffic remains robust, airlines are constrained from raising fares significantly due to intense competition. Combined with elevated fuel costs and higher financing expenses from scheduled aircraft deliveries, this will continue to impact profitability,” the report stated. ICRA noted that although the industry is still in the red, the projected losses are a marked improvement from pandemic-era setbacks. The aviation sector reported record net losses of Rs 23,500 crore in FY22 and Rs 17,400 crore in FY23, largely due to COVID-19 disruptions and fuel price volatility. Signs of gradual financial recovery are emerging. The industry’s interest coverage ratio—a measure of its ability to service debt—is expected to improve to between 1.5 and 2.0 times in FY26, indicating better debt-servicing capacity even in the face of persistent bottom-line pressure. In terms of operational performance, domestic air passenger traffic in June 2025 was estimated at 138.7 lakh, representing a year-on-year (YoY) growth of 5.1 percent compared to 132.1 lakh in June 2024. However, it declined by 1.3 percent on a sequential basis. Airlines' capacity deployment in June 2025 increased 4.9 percent over the previous year but fell 2.3 percent compared to May 2025. For Q1 FY26 (April–June 2025), domestic passenger traffic stood at 422.4 lakh, up 5.1 percent YoY. International traffic also posted steady gains: Indian carriers transported 29.7 lakh passengers in May 2025, up 7.3 percent YoY, though down 7.9 percent month-on-month due to geopolitical headwinds. Total international traffic for the first two months of FY26 stood at 59.8 lakh, marking a YoY growth of 12.1 percent. Looking back at FY25, domestic passenger traffic totalled 1,653.8 lakh, reflecting a YoY growth of 7.6 percent, while international passenger traffic reached 338.6 lakh, a significant increase of 14.1 percent over the previous year.