Geopolitical flare-ups, AI crash, tariff shocks to dampen India’s air travel demand in FY26, ICRA says
India’s air travel demand is expected to grow only modestly in FY26 as a series of external shocks weigh on sentiment, ICRA said in a report released Tuesday.
The rating agency, which maintained a Stable outlook on the aviation sector, driven by expectations of modest growth in domestic air passenger traffic in FY2026 at 4-6%.
According to ICRA, growth has been tempered by “cross-border escalations,” the “aircraft accident tragedy in June 2025,” and “trade headwinds stemming from US tariffs,” all of which have added uncertainty for carriers and passengers.
