Domestic aviation industry likely to clock Rs 2,000 - Rs 3,000 crore net loss in FY'25: Report

New Delhi: The country's civil aviation industry is projected to report a net loss of Rs 2,000 to Rs 3,000 crore in the current and next financial year as supply chain challenges and engine issues are expected to continue for some more time, according to a report.

In the report on Tuesday, rating agency ICRA also said that domestic air passenger traffic was estimated at 153 lakh in December, 7.3 percent higher compared to 142.5 lakh recorded in November last year.

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"Further, it grew by ~10.8 percent on a YoY basis and was higher by ~17.5 percent than the pre-Covid levels, i.e., December 2019. The airlines' capacity deployment in December 2024 was higher than December 2023 by ~7.5 percent and by ~3.8 percent over November 2024," it added.

Giving a stable outlook for the Indian aviation industry, ICRA said there are expectations of moderate growth in domestic air passenger traffic and a relatively stable cost environment in FY'25.

Moreover, the industry witnessed improved pricing power during FY24, reflected in the higher yields (over pre-Covid levels) and the revenue per available seat kilometre–cost per available seat kilometre (RASK–CASK) spread of the airlines.

"The momentum in the air passenger traffic growth witnessed in FY2024 is likely to marginally taper to 7-10 percent in FY2025 (compared to 13 percent in FY2024), given the high base of FY2024 and lower passenger traffic in H1 FY2025, impacted by severe heat waves and other weather-related disruptions.

"The yields are also likely to be under pressure, as airlines strive to maintain adequate passenger load factor (PLF). International passenger traffic for Indian carriers is expected to grow by 15-20 percent in FY2025," the report said.

For FY 2025 and FY 2026, Icra has projected the industry to register a net loss of Rs 20-30 billion.

Supply chain challenges and engine failure issues impacted the industry capacity over the last 18 months and are expected to continue affecting it this year, it added.

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