Domestic airlines are likely to widen their losses to $400-600 million in FY25 despite a likely rise in traffic, aviation consulting firm, CAPA India CEO, Kapil Kaul said on Wednesday.
In FY24, the losses of the domestic airlines is estimated to be at around $300-400 million, excluding IndiGo, which is profitable. The number excludes those of cash-strapped SpiceJet, which is yet to declare results for the last two quarters. InterGlobe Aviation, which operates IndiGo, reported a profit of Rs 1,894.8 crore for the January-March quarter, which was its sixth straight quarter of profit.
One of the reasons for the losses would be on account of capacity shortage due to the grounding of aircraft. At present, around 130 planes are grounded due to various reasons, and the number would be about 180, including the aircraft of Go First, it said. Go First stopped flying last year.
However, domestic airlines are expected to add 84 aircraft this year, taking the fleet count to 812 by the end of FY25 from 728 in the previous year. The fleet size would double by 2030, he said.
The domestic traffic and cargo volumes have, however, reached pre-Covid levels in 2023, and is likely to grow at 6-8% in FY25 to 161-164 million. Similarly, international traffic is estimated to grow by 9-11% to 75-78 million.
Domestic fares rose 1.3% in FY24 and were 34% higher compared to FY20, Kaul said, while speaking at the CAPA India Aviation Summit. However, airline costs are expected to rise 3.8% in FY25.
CAPA expects 25 more airports to be privatised during the next financial year, coupled with an investment of $4 billion by the Airports Authority of India in the next two years to better the airport infrastructure.
Kaul also highlighted that shortage of pilots will continue to be a concern for Indian aviation in the near future. Pilot shortage is a key shortcoming of the Indian industry in FY25 and with the new FDTL (flight duty time limitations) norms likely to be imposed soon the pilot shortage will be even more severe.
Last year, Air India, Akasa Air, Vistara and Air India Express faced pilot rostering issues due to FDTL norms and were forced to cancel flights due to protest and agitations by employees.