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Informist, Wednesday, Jun. 17, 2026

 

MUMBAI – The operating profit of airline companies is expected to fall 10-15% in 2026-27 (Apr-Mar) because of higher aviation turbine fuel prices, airspace restrictions, and depreciation of the rupee against the dollar, Crisil Ratings said Wednesday. The combined impact of higher costs, constrained pricing power, and capacity rationalisation is expected to reduce the operating profit of airline companies to INR 160 billion – INR 17 billion in FY27 from INR 190 billion in FY26, the rating agency said.

 

Crisil Ratings has calculated operating profit as earnings before interest, tax, depreciation, amortisation and rentals, excluding foreign exchange gains or losses, on a cash basis.

 

"The surge in global fuel prices following the onset of the conflict has increased the operating cost of airlines significantly," said Manish Gupta, the deputy chief rating officer at Crisil Ratings. "Even with the expected moderation in fuel prices, they will remain above the levels of the last fiscal," he said.

 

Global aviation turbine fuel prices have increased by over 50% amid the war in West Asia. This affects airlines because jet fuel accounts for around 40-50% of their costs. However, jet fuel prices have eased to around $125 per barrel currently from $145 per barrel earlier in June. Yet, they remain above the average of $90 per barrel in FY26.  

 

"The government of India's measure of 25?p on domestic ATF price increase starting April 01, 2026, has partially cushioned airlines from the immediate post-conflict spike in fuel cost," Crisil Ratings said. "The cost pressure has been exacerbated by the depreciation in the rupee because the majority of the expenses of domestic airlines, including fuel, lease rentals and maintenance costs, are paid for in foreign currency," it added.

 

The rating agency expects airline margins to be supported by route rationalisation and capacity trimming on international routes, which are affected by airspace restrictions and longer flying times. However, these factors will lead to a moderation in the airlines' growth, Crisil Ratings said.   End

 

Reported by Anand JC

Edited by Saji George Titus

 

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