India’s Aviation Sector to Face Slower Growth, Higher Losses This Year
Photo Credit: Passport control at Indira Gandhi International Airport in Delhi, India. Adobe Stock / saiko3p
Skift Take
The demand for air travel in India is growing at an unprecedented rate, but the aviation industry is still not out of the woods. Unless airlines expand internationally to gain more forex, they might continue to face losses.
India’s aviation sector saw steady, but subdued passenger growth last month with domestic traffic rising 4.5% year-on-year, according to a new report by credit ratings agency ICRA. During the month, the capacity deployment by airlines increased 1.7%.
While the agency maintained a "stable" outlook on the industry, it said the domestic growth during the current fiscal year will slow down to 4-6% due to geopolitical disruptions and the Air India crash in June. “These factors, coupled with trade headwinds stemming from US tariffs, are set to dampen business sentiments in the coming quarters, bringing more circumspection to travel,” ICRA said.
Air Traffic Control-related disruptions at the Delhi airport earlier this month are also expected to act as growth dampeners. However, it expects international growth to remain strong at 13-15% during the financial year.
Cost Pressures on Airlines: Meanwhile, airlines continue to face cost pressures. T
