"Airline cash balances are in some cases at dangerous levels", with the Centre for Asia-Pacific Aviation (CAPA) estimating that Indian carriers together had USD 585 million worth of cash in hand, with an annual industry turnover in excess of USD 10 billion.
"This represents the equivalent of less than three weeks revenue," latest CAPA India Aviation Outlook Report showed.
Maintaining that since almost 80 per cent of the cash balances were accounted for by just two carriers IndiGo and Jet Airways, it said the situation for some airlines was "even more precarious."
"One Indian carrier's cash in hand is understood at times to have dropped to the equivalent of less than one day's revenue and operations are being sustained by borrowing from travel agents against future ticket sales," the Sydney-based consultancy firm said without naming the airline.
However, it also said that the losses of Indian airlines of USD 1.3-1.4 billion in 2014-15 was expected to be down from USD 1.7 billion loss they had made last year but "the red ink is expected to continue", it said.
CAPA also estimated that Indian carriers, barring no-frill airline IndiGo, would require USD 1.6 billion of funding this year to stabilise their operations, without including any investment in aircraft.
"Given the current environment, this is likely to be a challenging exercise. Inability to access sufficient funds when required may impact the operational integrity and customer proposition of some carriers," the report said.
It said investments by foreign airline in existing Indian carriers "consequently, appear unlikely in the short term given recent losses and in light of the increasing intensity of competition in the market."
Despite the "sustained and widespread red ink" afflicting the Indian airline industry, the market would see three new airlines, Air Costa, AirAsia India and Tata-SIA, within the space of one year and more regional operators likely to join the fray, though "market exits can also not be ruled out," CAPA projected.