ICRA: Due to several delays throughout the year, India’s domestic aviation passenger traffic is predicted to rise at a slower rate of 0–3% in FY2026, which is much less than the initial estimate of 4-6 percent, according to an ICRA analysis.

The rating agency said that a number of operational, geopolitical, and sentiment-related variables that affected the demand for air travel are reflected in the negative adjustment. According to the research, domestic air passenger traffic increased by 2.2% year over year during the first eight months of FY2026 (April–November 2025), which was less than anticipated.

In contrast to its initial forecast of 4-6 percent, it said, “Domestic air passenger traffic growth to 0-3 percent in FY2026.” The June 2025 aviation disaster catastrophe caused travelers to be cautious, at least in the immediate aftermath.”

Cross-border escalations, which caused flight delays and cancellations earlier in the year, were identified by ICRA as one of the main causes of the slower increase. These changes had an impact on travel schedules and led to slower passenger flow at times.

The tragic June 2025 airplane disaster was another important element mentioned in the study. There was a brief decline in travel mood as a result of the occurrence, which made people cautious, especially in the immediate aftermath. According to the study, these kinds of incidents often affect passenger trust, even if just temporarily.

Additionally, corporate travel was hindered by US tariffs, which significantly reduced total passenger traffic. ICRA claims that the strain on domestic air traffic growth in FY2026 was exacerbated by the effect on business travel demand.

Additionally, between December 3 and December 8, 2025, IndiGo had operational problems that led to about 4,500 flight cancellations, according to the research. ICRA anticipates that travel mood would continue to be slightly affected in the immediate wake of the IndiGo incident, even though these cancellations only made up 0.4% of the total annual industry departures.

ICRA has maintained a stable prognosis for the domestic aviation sector in spite of these difficulties. According to the agency, the outages should only last a short while. It has maintained its prediction of 6–8% increase in domestic aviation passenger volume for FY2027.

ICRA did point out that domestic passenger numbers in FY2027 will be lower than anticipated due to the lower base in FY2026. Originally projected to be between 179 and 186 million, domestic air passenger traffic is now anticipated to be between 175 and 182 million in FY2027, according to the updated projections.

Additionally, ICRA has updated its view on the global stage. From an initial estimate of 13–15 percent, the growth prediction for Indian airlines’ international air passenger traffic in FY2026 has been lowered to 7-9 percent.

Overall, the research said that while some interruptions have affected near-term growth, the medium-term prognosis is steady since the sector is anticipated to rebound after these transient issues subside.