Turbulence Ahead: Challenges Looming Over India's Aviation Sector

India's aviation sector is navigating choppy skies as domestic air passenger traffic climbed 5.1% to over 1.38 crore in June year-on-year, though it slipped slightly from May figures, a recent report revealed.

The rating agency ICRA projects the industry could face net losses between Rs 2,000 to 3,000 crore by FY2026, driven by increasing ATF prices and geopolitical tensions. Despite a stable outlook, disruptions in the supply chain, notably issues with Pratt & Whitney engines, are impacting capacity and costs.

June 2025 saw domestic air passenger traffic rise to 138.7 lakh, a 5.1% increase from the previous year, but a 1.3% drop sequentially. Yet airlines expanded capacity by 4.9% year-over-year, while reducing it slightly over May. With emerging geopolitical and operational challenges, including regional conflicts and airspace closures, the industry's steady pricing power and passenger growth warrant careful monitoring.

(With inputs from agencies.)