Major Airlines Accelerate Bank Borrowing Ahead of 2026 Fleet Surge.
Key Points
- 1Bank borrowing is projected to rise in 2026 after a three-year low, driven by plans to induct 130–140 new aircraft.
- 2The domestic aviation industry faces a collective net loss of Rs 17,000–18,000 crore in FY26, nearly double earlier estimates, according to Icra.
- 3Rising costs, including dollar-denominated leases and fuel, increased staffing due to new flight duty norms, and higher foreign exchange hedging needs are key drivers for the increased borrowing.
- 4Major carriers like IndiGo (A321XLR) and Air India (wide-body deliveries) are leading the aggressive fleet expansion into international markets.
Bank lending to the Indian domestic aviation industry is poised for a significant increase in 2026. This follows a three-year low in net borrowing during the previous year. The expected rise in Airlines bank borrowing 2026 is driven by aggressive Commercial aviation fleet expansion plans and mounting operational costs.
Industry executives confirm that carriers are returning to banks for funding. This is necessary as they prepare for a fresh round of aircraft induction plans 2026 and expand international networks.
The Debt Paradox and Financial Strain
The anticipated rise in borrowing follows a sharp slowdown in net bank credit. Net bank borrowing by the aviation sector fell to Rs 2,183 crore in 2025 (up to November 28). This is a substantial drop from Rs 16,003 crore recorded in 2023, according to Reserve Bank of India (RBI) sectoral credit data.
However, the overall bank exposure to the sector continued to grow. Total outstanding loans to the industry reached Rs 48,649 crore as of November 28, 2025. This figure was up from Rs 39,746 crore in 2023, reflecting a cautious borrowing stance amid financial stress.
Financial losses remain a major concern for the sector. Credit rating agency Icra projects the domestic industry will post a collective net loss of Rs 17,000–18,000 crore in FY26. This revised estimate is nearly double the earlier projection. The losses are primarily attributed to muted passenger growth and currency depreciation. This financial pressure reinforces the need for external funding as expansion resumes.
Fueling the 2026 Fleet Surge
The core driver for increased Aviation sector bank lending is the accelerated fleet growth. Airlines are collectively expected to add between 130 and 140 aircraft in 2026. This includes 10 to 15 wide-body aircraft deliveries as long-haul international markets become a key focus.
This expansion marks a significant step up from 2025, a slower year where carriers added an estimated 85 to 95 aircraft. Major players are leading the charge in fleet modernization.
- IndiGo: The carrier is slated to induct its first Airbus A321XLR in 2026. This aircraft type will enable expansion into new international medium-haul routes.
- Air India Group: The group is accelerating its wide-body induction plan. This includes the arrival of new Boeing 787s and Airbus A350s. The airline aims to operate 81% of its international flights using upgraded aircraft by the end of 2026.
Rising Operational Costs and Currency Risk
Beyond aircraft acquisition, rising airline operating costs are pushing up borrowing needs. Nearly half of all airline expenses are denominated in US dollars. These costs include fuel, aircraft leases, and maintenance. This structure makes carriers highly vulnerable to currency volatility.
Foreign Exchange Exposure
A weakening rupee against the US dollar increases the cost of these dollar-denominated expenses. This necessitates increased hedging requirements, further adding to funding needs.
- Staffing Costs: Increased hiring is also a factor. New flight duty norms require more pilots and cabin crew. Setting up ground staff at international hubs will also push up overseas payouts in 2026.
In the long term, the Indian aviation finance market is evolving. S&P Global estimates that over US$170 billion will be required to support India’s traffic boom through 2030. This massive funding requirement, primarily for new aircraft, signals a sustained period of high external financing for the sector. For more commercial aviation news and analysis, visit our industry coverage at flying.flights.
Topics
You Might Also Like
Discover more aviation news based on similar topics
Can New Airlines Overcome High Costs and Transform India's Aviation Sector?
Despite multiple bankruptcies and high operating costs, India's aviation sector is poised for massive growth, but new and existing airlines face major financial hurdles.
Do IndiGo and Air India Crises Signal a Regulatory Breaking Point?
IndiGo and Air India operational crises expose India's aviation market systemic fragility, forcing government intervention and scrutiny of the DGCA's capacity.
Can IndiGo and Air India Handle India's Explosive Aviation Growth Hurdles?
Following a difficult year, experts debate if the IndiGo-Air India duopoly, holding over 90% market share, can manage India's projected doubling of air traffic by 2033.
Why are IndiGo and Air India expecting a major aircraft delivery surge in 2026?
Following a 2025 slowdown driven by Boeing production constraints, Indian domestic airlines anticipate a sharp 2026 aircraft delivery rebound, promising
IndiGo Unlocks Europe: First Airbus A321XLR Lands for Non-Stop Athens Flights
IndiGo received India's first Airbus A321XLR, a long-range narrow-body jet, which will launch non-stop services from Delhi and Mumbai to Athens starting in late January 2026.
India's Aviation Boom Strained by Crises at IndiGo and Air India
DGCA scrutiny follows IndiGo's massive December flight cancellations from a pilot shortage and Air India's safety lapses after a Boeing 787 crash, straining India's aviation duopoly.