India’s overall air passenger traffic is expected to grow by 1–3% in FY2027, reaching an estimated 424–432 million passengers, according to ICRA.

The rating agency expects the growth rate to remain moderate after India recorded a 2% increase in overall air passenger traffic during FY2026. Geopolitical tensions, the West Asian crisis, elevated aviation turbine fuel (ATF) prices and aircraft supply constraints could continue to affect passenger traffic.

India’s overall air passenger traffic increased 2% in FY2026 to 420 million, compared with 412 million in FY2025. The growth came despite geopolitical tensions, limited aircraft availability, supply disruptions linked to Flight Duty Time Limitation (FDTL) restrictions and cross-border tensions. For FY2027, ICRA expects passenger traffic growth to moderate to 1–3%. However, further disruptions from the West Asian crisis and continued high ATF prices could create downside risks to the forecast.

International air traffic at Indian airports was particularly impacted following the onset of the West Asian crisis. Passenger volumes and aircraft movements fell by around 20% and 17%, respectively, in March 2026 compared with February 2026.

While international traffic has since recovered on a month-on-month basis, passenger volumes remained 9% lower year-on-year during the first four months of FY2027. ICRA expects international traffic to gradually normalise in the coming months. However, any escalation in regional geopolitical tensions and sustained high ATF prices could slow the recovery.

Aircraft traffic growth also remained subdued at 1% in FY2026, mainly due to lower domestic aircraft movements caused by supply-side constraints, FDTL restrictions and the West Asian crisis. ICRA expects aircraft traffic growth to remain at 0–2% in FY2027. Domestic aircraft movements could see relatively stronger growth due to a low base effect, although higher ATF prices could limit the pace. International aircraft traffic is expected to remain under pressure from the West Asian crisis and its potential impact on global economic activity.

For its sample set of airports, ICRA expects revenues to increase by 6–8% in FY2027. The growth is expected to come from higher aeronautical revenues following the implementation of new tariff orders for the current control period. Growth in non-aeronautical and real estate revenues, along with moderate passenger traffic growth, is also expected to support airport revenues.

Operating margins for the sample set of airports are expected to remain stable at around 50% in FY2027 and FY2028. Despite the moderate traffic outlook, airport infrastructure investment is expected to remain elevated over the medium term. ICRA estimates that more than INR 1 lakh crore could be invested in airport infrastructure over the next four to five years.

The planned investment is expected to cover new greenfield airports, brownfield expansion projects and other airport development initiatives, including projects undertaken by the Airports Authority of India (AAI). The continued investment reflects the long-term expansion of India’s aviation infrastructure, even as passenger and aircraft traffic growth is expected to remain moderate in FY2027.