As we wrap up 2024 and pivot towards 2025, all eyes are on the Indian aviation sector, already the fastest growing domestic aviation market. The year 2024 was a memorable one for aviation sector, a few setbacks like the grounding of Jet Airways and Go First sure put a certain dent in the overall market growth, but competitor airlines like Air India and IndiGo made it up by expanding their routes, fleet expansion and realigning their strategies for growth. 

In 2025, the Air India-IndiGo duopoly is predicted to continue and turn even more ruthless with rise in air fares. This will leave passengers at the mercy of just two airlines and will be forced to purchase air tickets as per the airline demands, although the Ministry of Civil Aviation has agreed to intervene in case of exorbitant airfare rise, it will be interesting to see how the battle of airfares turns out for the airlines, passengers and MoCA. 

On the flip side, the Investment Information and Credit Rating Agency has predicted that the Indian aviation industry will post a net loss in the range of Rs 2,000-3,000 crore in fiscal 2025 and fiscal 2026, as compared to a net profit of Rs 1,600 crore in fiscal 2024. The projection of net loss is due to anticipated pressure on yields as airlines strive to maintain adequate passenger load factors amid elevated aviation turbine fuel prices.

The average ATF price in the first nine months of this fiscal stood at Rs 95,686 per kilolitre. Although it was lower by 7.7% on a year-on-year basis, it remained "47% higher" as compared to the pre-Covid level, ICRA said. This will keep the pressure on airlines' profitability, as the fuel cost accounts for around 30-40% of the airlines’ expense

The projected loss for fiscal 2025 and 2026 is still lower as compared to the loss of Rs 23,500 crore logged in fiscal 2022 and Rs 17,400 crore in fiscal 2023

Meanwhile the supply chain challenges and engine failure issues impacted the industry capacity over the last 18 months and are expected to continue affecting it in this fiscal year. 

Despite projecting losses, ICRA has projected a stable outlook for the Indian aviation industry, driven by expectations of moderate growth in domestic air passenger traffic and a relatively stable cost environment in fiscal 2025. 

Indian aviation is poised for growth in 2025 with new aircraft and airport upgrades. Over 1,600 aircraft are on order. However, airfares will stay high due to elevated costs. Domestic passenger traffic will grow by 7-10%, and international traffic by 15-20%.

Coming to airports, two major airports will commence international operations in 2025 easing the passenger traffic load on Delhi and Mumbai. The Noida International Airport as well as the Navi Mumbai International Airport are scheduled for first flight towards the end of Q1 of 2025

Several smaller airports around the country are in need or likely to see upgrades, but it is these two new greenfield airports that will attract national attention.

With the total passenger numbers projected at between 160-174 million for the coming year, a growth of 7-10% over 2024, the lens of the industry will also be trained on the progress of Air India, which merged with Vistara in 2024. Other emerging airlines like Akasa Air and Star Air are also expected to perform much better than last year given the rising passenger demand. 

This year will also witness the emergence of three new players – Air Kerala, Al Hind Air and Shankh Air. Although it is predicted that the emerging airlines have a ready set of demanding passengers queuing up for domestic travel, it will be interesting to see how the new players will perform given the cost competition, rising fuel prices and supply chain constraints. 

Going ahead in 2025, the Ministry of Civil Aviation is hopeful for a robust civil aviation growth with newer, Next-Gen aircraft entering Indian skies, keeping a check on the sustainability front as well as heeding to passenger demands of rising fares. If the ministry manages to keep some of the major issues like supply chain and costs in check, there’s no stopping the Indian aviation industry from reaching the top spot.