New Delhi: Domestic air passenger traffic rose 5.1 percent to over 1.38 crore in June on an annual basis but declined marginally compared to May, a report said on Friday.

Rating agency ICRA also said the country's aviation industry is projected to report a net loss of Rs 2,000 to 3,000 crore in FY2026, amid rising ATF prices and geopolitical risks.

While maintaining a stable outlook for the industry, ICRA said that supply chain disruptions, including Pratt & Whitney engine issues, continue to impact capacity and costs.

"For June 2025, domestic air passenger traffic was estimated at 138.7 lakh, 5.1 per cent higher than 132.1 lakh in June 2024. However, it witnessed a marginal decline of 1.3 per cent on a sequential basis. The airlines' capacity deployment in June 2025 was 4.9 per cent higher than June 2024; however, it was 2.3 per cent lower compared to May 2025," it said.

In the first quarter of 2025-26, domestic air passenger traffic stood at over 4.22 crore.

"... emerging geopolitical and operational headwinds -- in the form of rising crude oil prices (because of the Israel-Iran conflict), closure of the airspace over Iran and Pakistan (for Indian carriers), probable rise in insurance premia (after the recent aeroplane crash) and possible hesitation to travel -- warrant close monitoring for potential downside risks.

"The operating costs for the Indian aviation industry are likely to have increased in the past couple of months (due to flight cancellations and other operational challenges following the India-Pakistan conflict). Nevertheless, the overall passenger traffic and the pricing so far have remained steady," it said.

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