Key Points
- Domestic airlines are expected to lose ₹2,000-3,000 crore in FY2025 and FY2026.
- The losses will be smaller compared to previous years due to better traffic growth and pricing power.
- Domestic air traffic is expected to grow by 7-10%, and international traffic by 15-20%.
- Revenue for airlines is expected to rise by 10-15% in FY2025 and FY2026.
- ICRA maintains a stable outlook for the sector, supported by better pricing practices and infrastructure improvements.
- 16-18% of India’s airline fleet is grounded, leading to higher operational costs.
- New aircraft deliveries will be slow due to supply chain issues and a focus on expanding international operations.
Looma News
ICRA forecasts that domestic airlines will face a net loss of ₹2,000-3,000 crore in FY2025 and FY2026, mainly due to the weakened rupee and rising costs from grounded aircraft. However, these losses should be lower than in previous years, thanks to healthy traffic growth, better pricing, and reduced interest costs.
Kinjal Shah, senior vice president and co-group head at ICRA, highlighted that better pricing practices would help airlines manage their finances. The outlook for domestic air traffic looks strong, with expected growth of 7-10%, which would bring the total number of passengers to 164-170 million in FY2025. International traffic is expected to rise by 15-20%, fueled by strong demand from leisure travelers and favorable visa policies.
Airlines are expected to see a 10-15% growth in revenue in FY2025 and FY2026. ICRA continues to have a stable outlook for the aviation sector, thanks to improvements in infrastructure, better connections to tier II and III cities, and stronger pricing. However, the grounding of aircraft remains a challenge, with 16-18% of the fleet still grounded, down from 20-22% last year. Grounded planes lead to higher operational costs, as airlines need to rely on wet leases and use less fuel-efficient aircraft.
Growth in the sector’s capacity will be gradual due to supply chain issues affecting aircraft and engine manufacturers. Additionally, a large part of the new fleet will focus on boosting international operations.
