Turbulence Ahead: Indian Aviation Faces Financial Headwinds

The Indian aviation industry is expected to suffer a net loss of Rs 2,000 to Rs 3,000 crore due to ongoing supply chain and engine issues. Despite growth in air passenger traffic, financial challenges persist, with projections of continued losses in FY 2025 and FY 2026, despite improved pricing power.

The Indian aviation industry is projected to experience significant financial challenges over the next two years, as supply chain disruptions and engine issues remain persistent obstacles. These handicaps are expected to result in a net loss ranging from Rs 2,000 to Rs 3,000 crore, according to a report by rating agency Icra released on Tuesday.

Icra noted a steady increase in domestic air passenger traffic to 153 lakh in December, marking a 7.3% rise from November and a substantial gain over pre-Covid levels in December 2019. However, despite this rising capacity and improved pricing power observed in FY24, financial outlooks remain cautious.

While projections suggest a continued growth in international passenger traffic, expected to rise by 15-20% in FY2025, the financial burden from unresolved supply chain and operational challenges loom large. Consequently, Icra foresees the aviation sector registering a net loss between Rs 20-30 billion in FY2025 and FY2026.

(With inputs from agencies.)