India's Aviation Sector May Face Rs 2,000-3,000 Crore Losses In FY25-26: ICRA

ENA Sectors 2025-01-15 16:10:16 New Delhi, Jan 15 (KNN) India's aviation sector is expected to incur net losses between Rs 2,000 and Rs 3,000 crore in fiscal years 2025 and 2026, according to a new report from credit rating agency ICRA. The forecast comes as the industry continues to wrestle with ongoing supply chain disruptions and engine-related issues that have limited capacity expansion over the past 18 months. The sector has shown resilience in passenger traffic, with domestic travellers reaching 153 lakh in December 2024, marking a 7.3 percent increase from November and a 10.8 percent rise year-over-year. This figure notably exceeded pre-pandemic levels by 17.5 percent. Airlines responded to this robust demand by increasing capacity deployment by 7.5 percent compared to the previous year. Looking ahead, ICRA anticipates a moderation in domestic passenger traffic growth to 7-10 percent in FY25, down from 13 percent in FY24, citing a high base effect and weather-related disruptions expected in the first half of the fiscal year. International travel for Indian carriers shows more promise, with projected growth of 15-20 percent during the same period. The industry experienced favourable pricing dynamics in FY24, benefiting from improved yields and a positive RASK-CASK spread. However, analysts caution that yields might face downward pressure as carriers prioritise maintaining healthy passenger load factors. Persistent supply chain constraints and engine-related complications continue to pose significant operational challenges, with these issues expected to impact the sector's performance in the near term. Despite these immediate challenges, ICRA maintains a stable outlook for the aviation industry, pointing to expectations of a relatively stable cost environment and sustained demand growth. While the sector grapples with projected losses in the short term, its fundamental growth trajectory remains positive, supported by increasing domestic and international travel demand and demonstrated operational resilience. (KNN Bureau) 40657 https://knnindia.co.in/news/newsdetails/sectors/indias-aviation-sector-may-face-rs-2000-3000-crore-losses-in-fy25-26-icra 2025-01-15 16:10:16 knnindia.co.in India's Aviation Sector May Face Rs 2,000-3,000 Crore Losses In FY25-26: ICRA