India’s aviation sector is expected to see significant growth in both domestic and international passenger traffic in FY 2026, potentially offering a boost to the country’s growing medical tourism industry, according to a report by credit rating agency ICRA.in
Domestic air traffic is projected to rise by 7–10% year-on-year, reaching 175–181 million passengers. In FY 2025, domestic air travel saw a 7.6% increase, with 165.4 million passengers taking to the skies. International traffic, meanwhile, is expected to grow even more robustly—by 15–20%—building on FY 2025’s 14.1% increase that brought the total to 33.86 million international passengers.
The rise in air connectivity is likely to facilitate easier interstate and international travel for healthcare, potentially strengthening India’s standing as a global destination for medical tourism.
However, the report also highlights persistent financial challenges for the aviation industry. Despite the traffic boom, the sector is expected to incur losses in the range of ₹20–30 billion in FY 2026. The primary culprits include high aviation turbine fuel (ATF) prices, elevated lease obligations from newly inducted aircraft, and a sustained burden of fixed costs.
While passenger demand continues to rise, ICRA notes that financial recovery for airlines may remain constrained due to these increasing operational expenses.