India's skies are busier than ever, with domestic air passenger traffic soaring to 161.3 million in 2024. This marks a 6.12 percent increase from the previous year, according to the Directorate General of Civil Aviation. Despite this record-breaking growth and packed flights, Indian airlines continue to face significant financial struggles, with the industry projected to report billions of rupees in losses.^[1][2][3] ### Soaring Passenger Numbers Domestic air travel in India has seen a sharp rebound and consistent growth. In the first half of 2024 alone, Indian airlines carried 79.35 million passengers, a four percent increase over the same period last year.^[4] This strong demand reflects an expanding middle class and increased investment in aviation infrastructure across the country.^[4] Industry experts expect domestic passenger traffic to further climb by 7-10 percent in the current financial year, reaching between 164 million and 170 million travelers.^[5] ### The Paradox of Unprofitable Growth Even with full aircraft, India's airlines struggle to turn a profit. The combined net loss for Indian carriers widened to ₹5,290 crore in the financial year 2024-25, up from ₹924 crore in the previous fiscal year. Rat^[6]ing agency ICRA forecasts the industry will incur losses of ₹2,000-3,000 crore in both FY25 and FY26. This ^[5][7]paradox stems from intense price competition and a highly price-sensitive market. Mans^[8][9][10]i Singh, a Partner at BTG Advaya, explained that high demand does not automatically mean higher profits in India. "India is a very price sensitive market and high demand does not necessarily mean higher profits," Singh said. "As a result, airlines fly at full capacity but the margins are razor thin." Airli^[8]nes often offer heavily discounted fares to attract passengers, sometimes even operating flights at a loss to fill seats. This ^[11]fierce rivalry has led to destructive price wars. ### ^{[8][6][10][12]}High Operating Costs and Fuel Burden A major reason for the airlines' financial woes is their high operating costs. Fuel remains the single largest expense, accounting for 30 to 40 percent of an airline's total operating costs in India. Civil^{[8][13][14][11][6][5]} Aviation Minister Ram Mohan Naidu stated that aviation turbine fuel (ATF) makes up 45 percent of airfare prices. Indi^[15]a also imposes some of the highest taxes on ATF globally. Some ^[8][9][16]states levy a value-added tax (VAT) of up to 29 percent on jet fuel, significantly increasing costs for airlines. Amit ^[15][16]Mittal, an aviation expert, noted that fuel prices are outside an airline's control. "ATF is not something airlines can manage internally," Mittal said. "They are forced to pass it on to passengers through ticket prices, but in a competitive market that is not always possible." ### ^[8]Dollar Expenses, Rupee Revenue Another critical challenge is currency exposure. Most major airline expenses, such as lease rentals for aircraft, maintenance costs, and insurance, are paid in US dollars. Howev^{[8][5][7][17]}er, airlines primarily earn their revenue in Indian rupees from domestic ticket sales. The d^[8]epreciation of the Indian rupee against the US dollar directly impacts the already weak balance sheets of these carriers. Mitta^[8][17]l added that while some airlines earn dollars through international routes, this offset is limited because most Indian airlines are largely domestic operators. Airp^[8]ort charges also add another layer of cost for airlines. They pay landing fees, parking fees, and user development charges. These^[8] costs, while sometimes passed to passengers, still impact pricing and profitability. ### ^[8]Infrastructure Strain and Supply Chain Issues India's aviation infrastructure has expanded, but congestion at major airports like Delhi, Mumbai, Bengaluru, and Hyderabad remains a serious problem. This ^[8][11]congestion limits efficiency, causes delays, and increases fuel consumption. Indus^[11]try experts like Jeet Adani, a director at Adani Airports, highlighted that passenger demand is outpacing available capacity. He st^[18]ressed that building resilience through new airports and infrastructure is crucial to absorb shocks during disruptions. Supp^[18]ly chain disruptions and engine issues have also plagued the industry. Problems with engines from manufacturers like Pratt & Whitney have led to a significant number of grounded aircraft. Analy^[19][5][20]sts predict that up to 200 aircraft could be grounded in India by March 2025 due to these issues. This ^[19]affects overall capacity and operational efficiency. ### ^[5]Pilot Shortages and Regulatory Pressures A shortage of pilots and cabin crew has further strained airline operations. IndiGo, India's largest carrier, faced a crisis in December 2025, canceling thousands of flights due to pilot shortages and new flight duty time limitations. The D^[20][21][22]irectorate General of Civil Aviation (DGCA) even ordered IndiGo to reduce its schedule by 10 percent. Gove^[21][22][23]rnment policies have largely supported aviation growth, with schemes like UDAAN improving regional connectivity. Howev^[8]er, gaps remain, such as the state-level VAT on ATF instead of inclusion under the Goods and Services Tax (GST). Limit^[8][11]ed aircraft financing by Indian banks also adds to the industry's challenges. ### ^[8]Individual Airlines Navigate Turbulence Despite the broader industry struggles, some airlines are showing signs of improvement or managing challenges uniquely. Air India, under the Tata Group, has made strides in its turnaround. The airline reduced its losses by over 40 percent since its privatization in January 2022. Air I^[24][25]ndia reported a revenue of ₹61,000 crore in FY25 and even achieved a profit, excluding exceptional items, in the second half of that fiscal year. Campbel^[25]l Wilson, CEO of Air India, described the airline's transformation as "the Everest of corporate turnarounds." Howeve^[24]r, other carriers like SpiceJet reported a ₹55 crore loss in FY25, and Akasa Air saw a loss of ₹1,986 crore in the same period. Many smalle^[6]r airlines have failed over the past two decades, including Kingfisher and Jet Airways, highlighting the unforgiving nature of the Indian aviation business. Experts be^[8][9][26]lieve that unless these structural issues are addressed, Indian airlines will continue to face turbulence despite the sector's rapid growth. The future ^[9]will depend on strategic adaptations to both economic and external challenges. META_TITLE^[10]: India's Airlines Lose Billions Despite 161 Million Passengers in 2024

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