TBM Staff - Mumbai ICRA has revised its forecast for Indian airlines’ cumulative net losses for FY25 and FY26, lowering the estimate by 25-33% due to improved pricing power and a stable cost environment.
The new estimate is INR 2,000-3,000 crore, down from an earlier projection of INR 3,000-4,000 crore. Despite a downgrade in domestic air passenger growth expectations for FY25 (now pegged at 7-10%), Indian carriers are benefiting from a widening gap between revenue per available seat kilometer (RASK) and cost per available seat kilometer (CASK), indicating stronger pricing control.
ICRA forecasts domestic passenger traffic in FY25 to reach 164-170 million, while international passenger growth is expected to expand more robustly by 15-20%. However, ongoing supply chain disruptions, engine issues, and capacity constraints due to grounded aircraft—about 134 planes or 15-17% of the fleet—will continue to challenge the sector, increasing operational costs.
Airlines also face pressure from rising aviation turbine fuel (ATF) prices and the rupee-dollar exchange rate, both of which significantly affect cost structures, as fuel and leasing expenses are often dollar-denominated.
Despite these challenges, the overall outlook remains stable, with Indian airlines continuing to navigate operational hurdles while striving for improved profitability.
