India Airline Losses Seen Tripling to Rs 38,000 Crore as Gulf Conflict Lifts Fuel Costs

Indian airlines are on course to lose between Rs 36,000 crore and Rs 38,000 crore in the financial year ending March 2027, credit rating agency ICRA said, more than tripling a loss estimate it issued in February. The agency, based in New Delhi, announced the revised projection on October 29 and changed its outlook for the civil aviation sector from stable to negative, citing fuel costs, restricted routes and weaker passenger demand.

The revision marks a sharp turn for a sector that entered 2026 expecting growth. ICRA had estimated net losses of Rs 11,000 crore to Rs 12,000 crore for the same year in February. The agency said the Iran-US conflict that began in late February upended those calculations, triggering airspace closures, higher crude oil and jet fuel prices, and a fall in the value of the rupee against the dollar.

Fuel and Currency Squeeze

Fuel has done most of the damage. Aviation turbine fuel prices were 4.1 percent lower year on year in February and then climbed through 2026, reaching a 46.2 percent year-on-year increase in October, according to ICRA. Fuel accounts for 30 to 40 percent of an airline's expenses, so the jump hit profitability directly. Indian carriers earn in rupees but pay a large share of their costs in dollars, and the agency said the currency's depreciation and rising lease rentals added to the pressure.

Traffic has moved in the opposite direction. International passenger numbers for Indian carriers were expected to grow strongly early in the year, but after route diversions across West Asia began in late February they fell 19.3 percent year on year in the first half of the financial year.

A Wider Regional Shift

The strain is visible across the region. The Association of Asia Pacific Airlines reported on October 29 that its members flew 30.4 million international passengers in September, up 0.7 percent from a year earlier, ending five consecutive months of year-on-year declines. The association said part of the longer-haul growth came from passengers choosing routings that avoided Middle East hubs. Its director general, Wong Hong, said elevated jet fuel prices, airspace restrictions and weaker Asian currencies continue to press on operating costs and profitability.

In India, the airline outlook sits alongside a more resilient domestic hotel business. ITC Hotels reported 17 percent revenue growth for the September quarter, with occupancy up 481 basis points to 76 percent and average daily rates up 14 percent. The hotel group noted that domestic air passenger traffic declined 6 percent in August and September 2026 because of rising fuel costs and capacity reductions by airlines.

What It Means for Aviation Careers

The revised forecast points to a harder stretch for the airline finances that underpin jobs in aviation, from cabin crew and ground handlers to maintenance technicians and airport retail staff. When carriers cut capacity to protect margins, hiring often slows and schedules for existing crews become less predictable. Because fuel is priced in dollars, the rupee's slide raises costs even on routes where demand holds up.

The airport side of the hospitality sector is not standing still. K Hospitality, which runs travel food services and lounges at airports in India and overseas, said it plans to lift its restaurant count to 100 outlets this financial year by opening about 40 new restaurants, funded with roughly Rs 100 crore of internal investment. The company is targeting Rs 6,000 crore in system-wide sales by 2029-30, compared with around Rs 3,500 crore in 2025-26.

For workers weighing a move into aviation or airport hospitality, the next few months will show whether airlines cut schedules further. ICRA's outlook will be tested by fuel prices, the rupee and how quickly carriers can restore international capacity once routes reopen. Year-end holiday travel and continued cargo demand are expected to support volumes in the wider region, though the association warned that higher travel costs could temper growth.