ICRA has revised its projection for overall airport passenger traffic growth in FY2026 to 5-7% year-on-year, reaching 430-440 million passengers. This marks a downward revision from its earlier estimate of 7-9%. The moderation follows a 9% expansion in FY2025, which saw traffic rise to 412 million. The revised forecast is attributed to cross-border tensions and reduced aircraft availability after fleet inspections triggered by a fatal crash in June 2025. Growth of 5-7% in FY2026 would be the lowest since the Covid recovery phase.
Despite the slowdown, several supportive factors remain. International travel continues to expand strongly with better connectivity to new destinations. Domestic leisure and business travel also show consistent recovery. Additionally, new greenfield airports scheduled to begin operations in the second half of FY2026 are expected to support traffic. However, geopolitical uncertainties and US trade conflicts remain key risks that could impact momentum in both passenger and cargo segments.
During the first five months of FY2026, passenger traffic recorded a modest 3% growth, reaching 170 million passengers compared to 165 million in the same period of FY2025. Domestic traffic is projected to rise by 4-6% to reach 348-355 million passengers for the year. However, the growth rate moderated to just 2.6% in the early months of FY2026. International traffic is expected to perform better, expanding by 7-10% to 82-85 million passengers.
Vinay Kumar G, Sector Head, Corporate Ratings, ICRA, explained that international traffic continues to outpace domestic growth. This trend is being fueled by healthy tourism flows and enhanced international connectivity. He highlighted that international travel is more remunerative than domestic, providing a stronger revenue base for airport operators. ICRA projects airport sector revenues to grow 7-8% in FY2026, and when adjusted for one-time income in FY2025, growth is higher at 15-16%. This will be supported by tariff hikes at Delhi International Airport and rising non-aeronautical revenues.
Air cargo traffic is also expected to face moderation. Growth is projected at 4-6% in FY2026 compared to 10% in FY2025. The decline stems from weaker international cargo demand due to US trade wars and a high base effect following the Red Sea crisis. While international cargo growth has eased to 2-4%, domestic cargo is likely to rise by 5-7%, providing support to overall volumes. The first five months of FY2026 reflected this trend, with international cargo growing 4% while domestic cargo rose by 6%.
Looking ahead, India’s aviation sector is poised for significant capital expenditure exceeding INR 1,00,000 crore over the next 4-5 years. Key projects include greenfield airports at Jewar, Navi Mumbai, Bhogapuram, Parandur, and Purandar, along with major expansions in Bangalore, Hyderabad, Cochin, Mumbai, and Nagpur. The Airports Authority of India will also continue to upgrade facilities under its modernisation plan. These investments are expected to improve capacity, enhance connectivity, and support long-term growth despite current challenges.
