Aviation Industry Faces Stable Yet Challenging FY2025 Outlook

The aviation industry is poised for a stable yet challenging FY2025, with a projected net loss of Rs 3,000-4,000 crore. Despite healthy passenger traffic, the sector is grappling with supply chain issues, increased costs, and staffing shortages. The ability to raise yields will be crucial for profitability.

The aviation industry is anticipated to maintain its momentum in air passenger traffic into FY2025, but challenges remain. The sector is projected to incur a net loss of Rs 3,000-4,000 crore, similar to last year, despite the continued recovery in domestic and international travel.

In June, domestic air passenger traffic was estimated at 132.8 lakh, which was 3.7% lower than in May but 6.3% higher compared to the previous year. Rating agency Icra has provided a stable outlook for the sector, projecting continued recovery and a relatively stable cost environment.

However, the industry faces significant challenges such as supply chain disruptions, grounded aircraft, and increased operating costs due to the recall of engines by P&W and other OEMs. Furthermore, a shortage of pilots and cabin crew has led to flight cancellations and delays, adding to customer grievances.

Despite these hurdles, healthy yields and high passenger load factors are expected to absorb some of the financial impact. The ability of airlines to raise yields in line with input cost increases will be key to expanding profitability margins.

(With inputs from agencies.)