India’s domestic aviation sector continued its growth trajectory in May 2025, with passenger traffic estimated at 143.6 lakh, marking a 4.1 per cent year-on-year (YoY) increase from 138 lakh in May 2024, according to the latest report by credit rating agency ICRA.
The report also highlighted a 5.1 per cent YoY increase in airline capacity deployment, reflecting steady operational activity across Indian skies despite mounting external pressures.
Passenger Traffic Grows Despite Headwinds
During the April-May 2025 stretch, the number of people flying within India hit 286.8 lakh, up 6.2 per cent year-on-year, proof that travellers kept moving even with searing heat and shaky world news.
Indian airlines carried a record wave of overseas passengers in the same fortnight. April alone saw 30.1 lakh take off abroad, marking a brisk 17.2 per cent jump over the same month in 2024.
The fiscal year FY2025 (April 2024–March 2025) recorded 1,653.8 lakh domestic air passengers, reflecting a 7.6 per cent growth YoY and an impressive 16.8 per cent rise over the pre-COVID level of FY2020, when passenger numbers stood at 1,415.6 lakh.
International Traffic Sees Robust Growth
Indian airlines welcomed 338.6 lakh travellers on overseas flights during FY2025, up 14.1 per cent from a year earlier and nearly 49 per cent above pre-pandemic FY2020 figures. Such momentum lines up neatly with ICRAs upbeat outlook for the sector.
Industry Outlook Stable, But Caution Ahead
ICRA maintained a “stable” outlook for the Indian aviation industry. However, it flagged potential downside risks, citing rising crude oil prices due to the Israel-Iran conflict, airspace closures over Iran and Pakistan, a potential rise in insurance costs following a recent aircraft accident, and a possible dip in travel sentiment.
“Operating costs are likely to have risen due to flight cancellations and operational hurdles post the India-Pakistan conflict,” the report noted. Yet, passenger volumes and pricing remained largely unaffected.
FY2026 Forecast: Growth Continues, Margins Under Pressure
Looking ahead, ICRA forecasts domestic air passenger traffic to grow by 7–10 per cent in FY2026, though yields may soften as airlines aim to maintain high passenger load factors (PLFs).
International traffic is expected to outperform, with a projected growth of 15–20 per cent for Indian carriers in FY2026.
With India’s aviation market showing resilience amid external challenges, the sector’s long-term trajectory remains on an upward climb, though closely tied to the evolving geopolitical and economic landscape.
