Top aviation consultancy CAPA India has forecasted a significant industry-wide loss for Indian airlines in fiscal 2025.
· Despite witnessing a surge in demand and an escalation in ticket prices, airlines are poised to grapple with escalating costs, leading to anticipated losses ranging between $400 million to $600 million.
· With overall airline costs expected to escalate by 3.8% in fiscal year 2025, the sector faces a daunting uphill battle against rising operational expenses.
· IndiGo maintains its dominance in India’s skies, commanding a significant 60% market share, while the Air India group, comprising both budget and full-service carriers, holds approximately 30% of the market.
· CAPA India’s projections for domestic and international passenger traffic indicate a steady growth trajectory.
In a projection that underscores the complex dynamics of India’s aviation sector, top aviation consultancy CAPA India has forecasted a significant industry-wide loss for Indian airlines in fiscal 2025. Despite witnessing a surge in demand and an escalation in ticket prices, airlines are poised to grapple with escalating costs, leading to anticipated losses ranging between $400 million to $600 million.
The aviation industry reported a loss of $300 million to $400 million in the preceding year, albeit buoyed by market leader IndiGo’s commendable profitability. CAPA India underscores that while demand continues to outstrip the supply of planes, rendering India the world’s fastest-growing aviation market, this growth trajectory fails to offset the mounting financial challenges.
With overall airline costs expected to escalate by 3.8% in fiscal year 2025, the sector faces a daunting uphill battle against rising operational expenses. Despite this, airlines have witnessed record yields, with carriers leveraging capacity constraints to command higher fares. This strategy has resulted in increased passenger load factor (PLF), with planes operating at 85% capacity, contributing to record revenue streams. The trend of record yields is anticipated to persist in the short term, with a projected 1% rise in fiscal 2025, the industry anticipates some relief with the addition of 84 aircraft in the current year.
IndiGo maintains its dominance in India’s skies, commanding a significant 60% market share, while the Air India group, comprising both budget and full-service carriers, holds approximately 30% of the market. With over a thousand aircraft on order from leading manufacturers Airbus and Boeing, Indian carriers are positioning themselves for sustained growth despite the prevailing challenges.
CAPA India’s projections for domestic and international passenger traffic indicate a steady growth trajectory, with domestic traffic expected to reach 161 million to 164 million passengers and international traffic projected to soar to 75 million to 78 million passengers. Amidst mounting losses and operational hurdles, Indian airlines navigate a dynamic landscape marked by both promise and peril.
As the industry braces for heightened financial strains, stakeholders are urged to adopt proactive measures to mitigate risks and explore avenues for sustainable growth. Collaborative efforts between government agencies, industry players, and regulatory bodies are imperative to address structural challenges and foster a resilient aviation ecosystem conducive to long-term prosperity.
(With inputs from agencies)
