India’s domestic aviation industry is projected to report a net loss of Rs 2,000 to Rs 3,000 crore in the current and next financial years, weighted by ongoing supply chain disruptions and engine issues, according to a report by rating agency ICRA.In its report released on Tuesday, the agency highlighted that domestic air passenger traffic in December was estimated at 153 lakh, with a 7.3 per cent hike, against 142.5 lakh recorded in November 2024.”Further, it grew by ~10.8 per cent on a YoY basis and was higher by ~17.5 per cent than the pre-Covid levels, i.e., December 2019. The airlines’ capacity deployment in December 2024 was higher than December 2023 by ~7.5 per cent and by ~3.8 per cent over November 2024,” the report stated.OutlookICRA gave a stable outlook for the industry, noting expectations of moderate growth in domestic air passenger traffic and a relatively stable cost environment for FY25. The sector saw improved pricing power during FY24, with higher yields as compared to pre-Covid levels and a favourable revenue per available seat kilometre–cost per available seat kilometre (RASK–CASK) spread of the airlines.However, the momentum in passenger traffic growth is expected to taper off slightly to 7-10 per cent in FY25, compared to 13 per cent growth in FY24. This is attributed to a high base in FY24 and reduced passenger numbers in the first half of FY25, affected by severe heatwaves and other weather-related disruptions.”The yields are also likely to be under pressure, as airlines strive to maintain adequate passenger load factor (PLF). International passenger traffic for Indian carriers is expected to grow by 15-20 per cent in FY2025,” the report said.ICRA predicts the industry will record a net loss of Rs 20-30 billion for FY25 and FY26. Supply chain challenges and engine failure issues, which have hindered industry capacity over the past 18 months, are expected to persist this year, adding to the financial strain.
Domestic aviation industry to face Rs 2,000 crore loss in FY25 due to supply chain and engine challenges
