After overcoming persistent obstacles, the Indian aviation sector expects a net loss of Rs 30-40 billion in FY25, according to ICRA.

New Delhi According to ratings agency ICRA, India’s aviation industry is anticipated to sustain a net loss of ₹30-40 billion (₹3,000-4,000 crore) this fiscal year, similar to losses reported in FY24. Supply chain disruptions, engine problems, and a shortage of crew and pilots are just a few of the industry’s issues, all of which are expected to delay profitability recovery.

According to ICRA’s report, one of the most significant elements influencing the aviation sector’s financial performance is the business’s high fixed costs. Because to the industry’s large fixed-cost structure, profits are projected to recover slowly. According to the analysis, the Indian aviation sector is likely to post a net loss of 30-40 billion in FY2025, which is less than the 170-175 billion recorded in FY2023—as long as airlines continue to see good growth in passenger traffic and maintain price discipline. This is consistent with what was found in FY2024.

The rupee’s devaluation against the US dollar, along with the high cost of aviation turbine fuel (ATF), resulted in a significant net loss of $170-$175 billion for the sector in FY23. ATF expenses are significantly greater than before the COVID-19 epidemic, although having reduced from their peak. In FY24, the average price of ATF was ₹103,499 per kiloliter (kl), a 14% decrease from FY23 but 58% increase from pre-COVID-19 levels.

The high cost of fuel, which accounts for 30-40% of an airline’s operations, and other operational expenditures represented in US dollars have had and will continue to have an impact on airline cost structures. According to the ICRA, foreign currencies account for 45-60% of operational expenditures. This covers aircraft leasing payments as well as maintenance fees. This has a detrimental impact on carriers like as GoFirst and IndiGo due to supply chain concerns and the significant number of grounded aircraft caused by engine troubles, notably with Pratt & Whitney engines.

Despite these hurdles, passenger travel has rebounded significantly. Domestic air passenger volume in FY24 surpassed pre-Covid levels, rising 13% year on year to 15.4 crore. Indian airlines also recorded a 24% growth in foreign passenger traffic, reaching 29.68 million, exceeding the highest levels observed in FY19. Domestic airline passenger traffic totaled 27.09 million for the first half of fiscal year 25.

When questioned about the industry’s prospects, Adhil Shetty, CEO of, stated that inflation is on a downward trend and GDP growth is expected to be positive. Inflation must stay continuously and sustainably in line with the RBI’s target; hence, the central bank has made the prudent decision not to reduce its vigilance at this time.

If airlines can grow yields in tandem with rising input costs, the aviation industry as a whole will be able to generate a profit. ICRA maintains a stable outlook for the Indian aviation sector, citing continued recovery in air passenger volume and relatively constant prices. The ability to improve yields above current levels, however, may be limited.

Focusing on maintaining passenger load factors and securing some reimbursement from engine manufacturers will assist the industry in managing these issues and mitigating the financial impact of grounded aircraft and other operational disruptions.

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