A ratings agency report projects carriers will incur net losses ranging from ₹36,000 crore to ₹38,000 crore in the current fiscal year. The downturn is fueled by slowing passenger traffic growth, expensive aviation turbine fuel, and currency depreciation against the US dollar. Additionally, carriers are absorbing higher lease rental costs tied to continuous aircraft deliveries, with the regional conflict expected to suppress passenger traffic growth through FY27.
Key points
Airlines are struggling to pass their escalating operational and currency expenses on to…: Airlines are struggling to pass their escalating operational and currency expenses on to consumers through higher ticket fares.
The sharp depreciation of the Indian rupee against the US dollar is driving major foreign…: The sharp depreciation of the Indian rupee against the US dollar is driving major foreign exchange losses for carriers.
Prolonged geopolitical tensions and elevated aviation fuel prices continue to create seve…: Prolonged geopolitical tensions and elevated aviation fuel prices continue to create severe financial headwinds for the aviation industry.
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"The losses were primarily driven by moderation in passenger traffic growth, rising aviation turbine fuel (ATF) prices and forex losses arising from the sharp depreciation of the Indian rupee," the ratings agency said in the report.
The US, Israel-Iran war, which started in late February is expected to dampen air passenger traffic growth in FY27, the report added.
Moreover, higher costs due to the depreciation of Indian Rupee against the US dollar, elevated ATF prices and a rise in lease rentals amid continued aircraft deliveries are projected to cause a net loss of Rs 36,000-38,000 crore in this fiscal.
These cost escalations may not be adequately passed on to passengers through fare hikes, the report added.
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