A REPORT by credit rating agency ICRA (Investment Information and Credit Rating Agency of India) suggests that despite traffic returning in large numbers post Covid, Indian carriers are heading for a loss running into billions, reports Montreal's Simple Flying.
ICRA has forecasted gloomy figures for the country's carriers for the financial year 2023. According to its report, airlines in India will post a net loss of nearly US$2 billion and will have a collective debt of more than six times that amount.
While air traffic remains eight per cent lower than pre-pandemic levels, domestic passenger traffic has seen a 26 per cent year-on-year increase, with almost 11.5 million travellers flying in October compared to nine million the previous year.
But several factors are at play, which have increased the overall costs of operations, making it difficult for airlines to make a profit.,
Said ICRA: 'While a meaningful improvement in passenger traffic is expected in FY2023, the pace of recovery in the industry earnings will be sluggish and the industry is expected to incur a net loss of around INR150-170 billion owing to elevated costs.'
With fuel costs accounting for 30-40 per cent of operational expenses for Indian airlines, the enormous increase in its price over the months has made life difficult for airlines. Just this year alone, jet fuel has seen an increase of 58 per cent.
Currently, aviation fuel is trading at almost $1,500 per kilolitre. The airlines are left with no choice but to pass it on to the passengers as increased airfares, but even that hasn't been enough to offset the tremendous rise in price.
SeaNews Turkey
ICRA has forecasted gloomy figures for the country's carriers for the financial year 2023. According to its report, airlines in India will post a net loss of nearly US$2 billion and will have a collective debt of more than six times that amount.
While air traffic remains eight per cent lower than pre-pandemic levels, domestic passenger traffic has seen a 26 per cent year-on-year increase, with almost 11.5 million travellers flying in October compared to nine million the previous year.
But several factors are at play, which have increased the overall costs of operations, making it difficult for airlines to make a profit.,
Said ICRA: 'While a meaningful improvement in passenger traffic is expected in FY2023, the pace of recovery in the industry earnings will be sluggish and the industry is expected to incur a net loss of around INR150-170 billion owing to elevated costs.'
With fuel costs accounting for 30-40 per cent of operational expenses for Indian airlines, the enormous increase in its price over the months has made life difficult for airlines. Just this year alone, jet fuel has seen an increase of 58 per cent.
Currently, aviation fuel is trading at almost $1,500 per kilolitre. The airlines are left with no choice but to pass it on to the passengers as increased airfares, but even that hasn't been enough to offset the tremendous rise in price.
SeaNews Turkey