NAVIGATING UNPRECEDENTED TURBULENCE IN 2024-2025

The airline industry's short story of recovery, rapid bounce back from the pandemic, demand outstripping constrained supply, and a bright path back to profitability — now reads more like a complicated novel of competing shocks. In the span of two years, the sector moved from desperate retrenchment to a hopeful rebound; now, in late 2025, the mood is decidedly mixed.

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The Indian aviation industry, one of the world’s fastest-growing markets, finds itself caught in a confluence of crises that threaten to ground the dreams of an entire sector. As the nation ascended to become the world's fifth-largest aviation market in 2024 with 241 million passengers, a darker narrative was simultaneously unfolding behind the glossy statistics. Credit rating agency ICRA's stark projection that the industry will incur net losses of ₹95-105 billion in FY2026, nearly double the ₹55 billion losses estimated for FY2025, serves as a sobering testament to the mounting challenges confronting Indian carriers. This deepening financial haemorrhage, driven by a toxic combination of declining traffic volumes, grounded aircraft, currency volatility, geopolitical uncertainty, and rising operational costs, paints a picture of an industry struggling to maintain altitude in increasingly hostile skies.

The traffic slowdown represents one of the most alarming departures from India's historic aviation growth trajectory. For years, the Indian market had been the darling of global aviation forecasters, with passenger numbers expanding at double-digit rates and ambitious projections suggesting the country would become the world's third-largest market by 2030. However, 2024 and 2025 have shattered this optimistic narrative. Domestic air passenger traffic experienced its first contraction in months during July 2025, with a 2.9 per cent year-on-year decline that sent shockwaves through the industry. While August 2025 showed a marginal recovery with nearly flat growth of 0.3 per cent, the damage to confidence and financial projections had already been inflicted. ICRA has subsequently revised its domestic passenger growth forecast for FY2026 downward to a modest four to six per cent, a dramatic reduction from earlier projections of 7-10 per cent growth.