Icra cuts domestic air traffic growth outlook

India's domestic air passenger traffic growth is expected to slow sharply this fiscal, as rating agency Icra cutting its forecast to 0-3% citing multiple flight disruptions and safety concerns, in the backdrop of the Ahmedabad air tragedy in June and weaker business travel amid global trade headwinds.

Icra's downgrade, from its earlier forecast of 4-6% growth, came even as aircraft load factors touched record highs. It also revised its international passenger traffic growth forecast for Indian carriers in FY26 to 7-9%, from 13-15% earlier estimated.

The revision follows "slower-than-expected traffic growth in the first eight months of FY26," which was hit by cross-border escalations that led to flight disruptions and cancellations earlier in the year, the agency said.


It also pointed to the impact of crash of Air India flight AI-171 in June "that made travellers hesitant at least during the period immediately post the accident."

Operational disruptions at IndiGo early this month dented sentiment further. Between December 3 and 8, the country's largest airline cancelled around 4,500 flights. While these cancellations accounted for "only about 0.4% of the total annual industry departures."

Icra said it expects "travel sentiments to dampen in the aftermath of the IndiGo episode." Business travel demand has also remained under pressure, with cra flagging "headwinds stemming from US tariffs" as a factor weighing on traffic growth.