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Expect domestic aviation traffic to decelerate from 11% YoY growth in Q4FY25 to 1% YoY drop in Q4FY26E, driven by the declining fleet size of non-INDIGO (INDIGO IN) carriers and INDIGO’s focus on complying with new Flight Duty Time Limitations (FDTL) norms. Per the regulator and industry data, operating fleet size of Tata Group airlines fell 5% YoY to ~270, despite nine aircraft being delivered by Boeing and Airbus. As per our estimate, domestic airfares grew 5% YoY in response to rising fuel cost and INR weakening – most of the fares were hiked in March 2026 by 14% YoY, which would partially offset rising fuel cost in Q1FY26. INDIGO’s international airfares grew more aggressively in March / April 2026 at 21% / 54% YoY, which partly offset the traffic loss in March in the Middle East amid US-Iran war (the Middle East comprises ~50% of INDIGO’s total international departures).     

Per the recent schedule for summer 2026, YoY domestic departures would drop ~6% YoY – INDIGO’s departures dropped 3% YoY, but the share of departure rose to ~62% (+230bps). This implies a supply-constrained market for the next three quarters  at least, which would lead to better pricing power and higher load factors.

Domestic passenger traffic may have grown only 1% YoY in Q4FY26E: Based on data from the Directorate General of Civil Aviation and the Ministry of Aviation, we estimate that domestic demand grew by mere 1% YoY in Q4E versus 2% growth in Q3FY26 and 11% YoY growth in Q4FY25, due to declining fleet size of non-INDIGO carriers and INDIGO’s focus on complying with new FDTL norms. We expect the industry’s passenger load factor (PLF) to be 87% in Q4FY26E from 86% in Q3FY26 and 87% in Q4FY25.

Expect industry airfares to likely grow 5% YoY in Q4FY26E: Expect Q4E industry airfares to likely rise 5% YoY – Airfares likely fell 4% in January followed by a growth of 1% in February and 14% growth in March. International airfares of INDIGO were likely up 24% QoQ in Q4FY26E, offsetting a 4% QoQ fall in domestic airfares.

INDIGO to post reported PAT loss of INR 7.0bn in Q4FY26E: Expect INDIGO to post a 123% YoY drop in reported PAT, led by forex loss and higher cost, though partly offset by a rise in airfare. Adjusted PAT (excluding forex impact) in Q4E would be INR 33.4bn versus INR 29.3bn in Q4FY25. We expect PLF at 88% in Q4FY26E versus 87% in Q4FY25. Q4E forex loss likely would by INR 40bn.

SpiceJet (SJET IN) to post reported PAT loss of INR 817mn in Q4FY26E: We expect SJET to post a 125% YoY drop in reported PAT. Adjusted PAT (excluding forex impact) in Q4E would be at INR 771mn versus PAT of INR 3.2bn in Q4FY25 (Q4FY25 saw other income of INR 4.9bn). We expect PLF at 90% in Q4FY26E versus 85% in Q4FY25. Expect Q4E forex loss at INR 1.6bn.

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