Indian Aviation Industry Faces Rising Losses Amid Operational Setbacks

The Indian aviation industry's net losses are expected to almost double in the current fiscal year due to slower passenger growth and increased operational costs, including higher aircraft deliveries. Despite stable outlooks for traffic growth, financial pressures remain significant. Costly operational setbacks further contribute to widening losses.

The Indian aviation sector is bracing for increased financial losses as net losses are projected to nearly double, reaching up to Rs 10,500 crore in the current fiscal ending March next year. This increase is mainly attributed to slowing passenger growth and rising costs associated with new aircraft deliveries, a report revealed on Tuesday.

Despite the expected challenges, rating agency Icra maintains a stable outlook with a forecasted 4-6% growth in domestic passenger traffic by FY26. Yet, they caution that the industry's financial health will continue to experience significant strain. Icra predicts the sector will face a widened net loss of Rs 95–105 billion in FY2026, a sharp rise from the estimated Rs 55 billion loss in FY2025.

The report highlights additional difficulties, such as supply chain disruptions and the grounding of around 133 aircraft due to engine failures as of March 31, 2025. These issues have not only led to increased operational expenses but also grounded-related costs, heightened lease rentals for replacement aircraft, and lowered fuel efficiencies, thus impacting the industry's economic performance further.

(With inputs from agencies.)