A gas turbine engine comprises a fan rotor having fan blades received within an outer nacelle, and the outer nacelle having an inner surface. At least a portion of the nacelle inner surface extends radially inwardly to be radially inward of an outer diameter of the fan blades. The inner surface of the nacelle is formed with a trench, which extends into the inner surface to a radially outer extent that is spaced radially outward of the outer diameter of the fan blades.