Air passenger traffic within India surges by 11.3% to reach 148.8 lakh in March, maintaining a steady forecast.
Hop on Board: Soaring High in India's Aviation Sector
The Pulse of Indian Skies: New Delhi
March 2025 served up another boost for India's aviation industry, with a whopping 148.8 million domestic passengers, a whopping 11.3% surge from the previous year. Compared to February 2025's 140.4 million, the numbers indicate a robust recovery from the pre-Covid era, according to a recent ICRA report.
For the entire FY25 (April 2024-March 2025), the domestic traffic clocked an impressive 1,657.1 million, marking a 7.8% year-over-year (YoY) increase and an impressive 17.1% jump from pre-Covid days. The outlook for FY26 remains promising, with moderate growth in domestic air passenger traffic and a stable environment on the cost front predicted.
The international passenger traffic for Indian airlines in the 11 months of FY25 amounted to 309.5 million, a satisfying 14.6% YoY increase, surpassing the pre-Covid level by no small measure - a staggering 41.9% leap.
The report reveals that the airlines' capacity deployment in March 2025 exceeded that of March 2024 by 8.5%, and was also higher by 10.7% over February 2025. This growth was on par with ICRA's estimates of 7-10% YoY expansion for FY25.
The domestic industry operated at a passenger load factor (PLF) of 88.2% in March 2025, up from 86.0% the year prior, and maintaining an average 87.0% for FY25 (against 88.0% in FY24).
ATF prices were on a downward spiral throughout FY25, with reductions noted in April, June, September, October, January, and March 2025. Overall, FY25 prices averaged 8% lower YoY. April 2025 saw a further 6.1% decrease sequentially, and a 12.9% slip YoY.
Predicting that airlines' fare hikes in line with input cost increases could help broaden profit margins, the ICRA report encourages the sector to enhance its financial health.
Some key factors backing the ICRA report's stable outlook for the Indian aviation sector in FY26 include:
- Robust domestic passenger traffic: The steady climb in domestic passengers underscores a strong market and an increase in demand across India[1].
- Efficient use of resources: The industry’s high PLFs, hovering around 88.2% in March 2025, reflect efficient use of capacity and healthy demand[3].
- Plummeting fuel prices: Expected to stay within the $60-$65 per barrel range in FY26, lower crude oil prices will help slash fuel expenses and boost profitability[4].
- Rising Indian economy: A 6.5% projected growth in FY26, propelled by smart fiscal and monetary policies, will strengthen consumer spending and business activity, boosting air travel demand[4].
- Untapped potential: With India's trips per capita standing at around 0.1 (compared to China's 0.5), the sector boasts substantial room for growth, especially as the middle class explores air travel[5].
- Improved infrastructure and proactive government policies: Infrastructure upgrades and favorable government policies improve capacity and service quality, further bolstering the aviation sector's growth prospects[5].
Together, these influencers form a solid foundation for the ICRA report's positive outlook for the Indian aviation industry in FY26, with expectations of moderate growth, fuel savings, and a favorable economic and policy climate[1][4][5].
- In the upcoming FY26, the finance sector predicts a moderate growth in domestic air passenger traffic, driven by a robust domestic market and an increasing demand for air travel.
- The ICRA report suggests that the lowering of fuel prices, anticipated to remain within the $60-$65 per barrel range in FY26, will contribute significantly to slashing fuel expenses and boosting the profitability of Indian airlines.
- With a projected growth of 6.5% in FY26, powered by smart fiscal and monetary policies, the rising Indian economy will strengthen consumer spending and business activity, thereby boosting air travel demand and making a positive impact on the overall outlook of the aviation sector in FY26.
