Indian Airlines Records ₹5,289.73 Crore Combined Loss in FY25, Government Tells Parliament

Financial Stress Persists Despite Traffic Growth

India’s scheduled domestic airlines reported a cumulative net loss of ₹5,289.73 crore in FY2024–25, the government informed Parliament. This underscored continued financial stress in the aviation sector despite record passenger growth and aggressive fleet expansion.

According to The Economic Times of India, the Ministry of Civil Aviation released the figures in a written response. It noted that the high cost of operating, aircraft downtimes, supply chain issues, and the high cost of lease payments remained on balance sheets during the fiscal year ending in March 2025. The disclosure comes at a time when Indian carriers are inducting aircraft at scale while simultaneously navigating cost volatility and intense fare competition.

Pressures on Cost and Capacity Enhancement

The losses were reported despite the fact that domestic air passenger traffic surpassed levels before the pandemic, according to the government figures presented by The Economic Times of India. One of the volatile commodities was the aviation turbine fuel (ATF) that consumed almost 35-40% of the operating cost of an airline. The commodity was at its volatile stage during much of FY25. Moreover, global bottlenecks in the supply chain, especially Pratt and Whitney engine problems on Airbus A320neo airlines, caused several aircraft to be grounded, which lowered the number of seats per unit and the cost of operating units.

According to the estimates provided by industry publications based on CAPA India, there are over 700 commercial aircraft currently operated by the airline industry in India, and over 1,200 aircraft on the order list. There have also been aggressive expansion plans, particularly by IndiGo and the Air India Group, that have added to lease liabilities and maintenance reserves, further straining cash flows. Lease rentals are in dollar form, which makes the airlines vulnerable to the currency devaluation risk, which has been raised several times in the parliamentary debates, according to The Economic Times of India.

In contrast to the broader industry stress, a handful of carriers managed to remain in the black. IndiGo reported a net profit of ₹8,172.5 crore in FY2023–24, driven by scale efficiencies and strong yields, while Air India Express also posted operational gains amid network restructuring and integration synergies, according to company filings cited by The Economic Times of India.

Government Position and Policy Interventions

The Ministry of Civil Aviation made it clear that airlines were commercial entities that made their own decisions, though the government was assisting the industry by policy-based initiatives. This included programmes like the UDAN regional connectivity program, rationalisation of airport fees, and creation of MRO systems. Union Budgets of the recent past have also proclaimed customs duty rationalisation on aircraft parts to empower domestic maintenance ecosystems.

However, the loss figures indicate that while passenger numbers are rising, India handled over 150 million domestic passengers in 2024, as per DGCA data, profitability remains uneven across carriers. Yield pressure in competitive trunk routes and rising airport user charges in metro hubs have further complicated the financial recovery trajectory.

Financial Performance Analysis of the Indian Aviation Sector

(Approximate industry-wide loss estimates compiled from parliamentary disclosures and industry reporting. Source: As reported by The Economic Times, citing Ministry of Civil Aviation data tabled in Parliament.)

Industry Perspective

Aviation consultancy CAPA India had continuously been arguing that

"Although India is one of the fastest-expanding aviation markets in the world, its profitability is structurally weak because of the high taxation on ATF and infrastructure expenses."

As quoted in The Economic Times, CAPA analysts have opined that cost rationalisation, better ancillary revenue bases, and better fleet utilisation are needed to achieve sustained profitability.

Sector Projection: Expansion with Reservation

According to DGCA statistics, in 2024, Indian airlines carried out more than 1.6 million domestic flights. However, operational reliability was put to the test, and on-time performance of the leading airlines has often fallen below 80% a month, and the number of flights that have been postponed because of technical and operational issues has increased significantly. In 2024-25, the DGCA services issued warnings of more aircraft groundings related to Pratt and Whitney engine problems, impacting a large part of the A320neo fleets, disrupting capacity, and pushing unit costs higher.

At the same time, domestic traffic reached 150 million passengers, yet the pressure on the yield increased as airlines absorbed the cost shock instead of fully transferring it to the consumers. Increase in airport infrastructures, such as capacity increase in Delhi, Bengaluru, as well as the new Noida International Airport, has led to growth in slot availability but increased user development charges and aeronautical charges. As India is set to emerge as the third-largest aviation market in the world in this decade, the fundamentals of the industry have been good, but its long-term profitability will be anchored on operational reliability.