Indian airlines may see losses shrink by a fourth this year: Estimate

Despite the growth, the number of flyers in November were 11.6 million. That’s 2% less than four years ago, before the pandemic.

In line with the slow recovery in footfalls, the airlines were also slow with adding to their fleet. New capacity was up 8% in November 2023, but still some distance (4%) away from the pre-pandemic levels.

On the other hand, the slight easing in the cost of jet fuel was offset by the falling value of the rupee against the US dollar. When the rupee loses value, it takes more dollars to pay for the jet fuel.

Right now, in December 2023, the price of aviation turbine fuel (ATF) averaged at about Rs 1.07 lakh per kilolitre, that’s cheaper by 4.6% compared to a month ago and 10.5% cheaper compared to December 2022.

The industry witnessed improved pricing power and the trend may continue for the remaining three and a half months in the financial year.

The other big challenge that airlines face is the grounding of planes due to engine failures. “While half of the fleet of beleaguered airline Go First has been grounded, the impact on IndiGo has also increased. Earlier, over 40 aircraft of Indigo were grounded, due to the recent powder metal issue in P&W engines. Another 30-35 more aircraft of IndiGo could get grounded,” the report warned.

This estimate from ICRA is in line with that of the consulting firm CAPA, which issued a similar warning in November 2023.

According to CAPA, 161-166 aircraft are currently grounded, and this number could go up to 200 before March 2024 ends.