Why Indian Airlines Aren't Making Money Despite the Travel Boom

In January this year, the domestic air passenger traffic in India was over 15 million, according to credit ratings agency ICRA. This was almost a 15% increase over last year and was 18% more than the pre-Covid levels recorded in January 2020. Meanwhile, Indian airlines’ capacity deployment during the month increased 11%. 

At the same time, ICRA expects the industry to report a net loss of INR 20-30 billion ($230-346 million) in the current fiscal year and the next year, down from a net profit of about INR 16 billion ($185 million) in the 2024 financial year. This is due to expected pressure on airlines in maintaining adequate passenger load factor amid high prices of aviation turbine fuel (ATF). 

“Further, the higher borrowing costs, due to increased lease liabilities with the scheduled aircraft deliveries for select airlines, are likely to increase the interest burden,” it noted. Depreciated value of the Indian Rupee as against the U.S. Dollar is also expected to add to the financial woes of the airlines. 

It added that despite these factors, the expect