Indian airlines projected to face increased losses despite rising demand, ticket prices

New Delhi: CAPA India, a leading aviation consultant, on Wednesdasy estimated that Indian airlines will face a bigger industry-wide deficit in fiscal year 2025, as rising expenses offset the benefits of increased demand and ticket prices.

CAPA India expected losses for the fiscal year ending March 2025 to be between $400-600 million, a major increase from the $300-400 million loss reported the previous year, despite market leader IndiGo reporting a record profit.

The consultant ascribed the forecasted losses to a 3.8 percent increase in total airline expenditures in fiscal year 2025. Although it did not identify the previous year's cost increase, it highlighted India's standing as the world's fastest-growing aviation market, with demand outpacing the supply of planes.

This demand-supply discrepancy has resulted in record industry yields, as airlines take advantage of a capacity shortage by charging higher rates, resulting in fuller flights as measured by the passenger load factor (PLF).

CAPA expected that the trend of record yields would continue in the short term, with an approximately 1% increase in fiscal year 2025 and a PLF of 85 percent.

Despite present capacity constraints, CAPA predicts respite with the acquisition of 84 aircraft this year, increasing carriers' overall fleet to 812 from 728 as of March. CEO Kapil Kaul stated that India's fleet is likely to more than triple by 2030.

IndiGo, India's main airline with a 60% market share, faces competition from the Air India group, which includes both low-cost and full-service carriers. They account for around 30% of the market and have more than a thousand aircraft on order from Airbus and Boeing.

CAPA India's estimates also show an increase in domestic and international passenger traffic, with domestic traffic predicted to reach 161 million to 164 million passengers, up from around 154 million, and overseas traffic expected to rise from 75 million to 78 million.

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