Indian Aviation Sector Likely To See Losses In FY25 And FY26 Despite Strong Passenger Growth: Report

The Indian aviation sector is expected to report net losses between Rs 2,000 crore and Rs 3,000 crore in both FY25 and FY26, according to a report by ICRA.

This follows a profitable FY24, where the industry recorded a net profit of around Rs 1,600 crore, ANI reported.

The expected losses are largely due to pricing pressures, as airlines strive to maintain healthy passenger load factors (PLF) amid persistently high aviation turbine fuel (ATF) prices.

The industry’s recovery in earnings is expected to be gradual, hindered by substantial fixed costs.

“The Indian aviation industry to report a net loss of Rs. 20-30 billion in FY2025 and FY2026 compared to a net profit of ~Rs. 16 billion in FY2024 due to anticipated pressure on yields," ICRA stated.

Adding to the financial strain, airlines are grappling with rising borrowing costs. The scheduled delivery of new aircraft will further inflate lease liabilities, intensifying the interest burden on carriers.

However, the projected losses for FY25 and FY26 remain significantly lower than the Rs 23,500 crore and Rs 17,400 crore losses recorded in FY22 and FY23, respectively.

Despite these challenges, the industry’s debt levels are expected to remain stable, with an interest coverage ratio of 1.5-2.0 times in FY25, suggesting that airlines will still be able to manage their debt obligations.

“The pace of recovery in industry earnings is likely to be gradual, owing to the high fixed cost nature of the business," ICRA said.

On a positive note, domestic air passenger traffic continues to display robust growth. January 2025 saw a 14.5 per cent year-on-year increase in passenger numbers, surpassing pre-pandemic levels by nearly 17.9 per cent.

This strong demand for air travel indicates a promising long-term outlook for the industry, despite immediate financial hurdles.

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