CAPA India projects complex aviation landscape for FY2025 and beyond

CAPA India, for the past two decades plus, has been consistently publishing an annual aviation outlook and a mid-year update, offering comprehensive insights into the sector's performance. It covers various aspects such as demand, capacity, fleet, financial performance and key strategic issues.

The organisation's track record speaks volumes as it accurately forecasts industry performance across more than 40 outlooks, even amidst the challenges of the pandemic, due to rigorous research and proprietary modelling.

Looking ahead to the 12 months ending March 31, 2025, CAPA India anticipates domestic air traffic to grow by 6-8 per cent year-on-year, reaching 161-164 million passengers, up from 153.4 million in FY2024. Meanwhile, international traffic is expected to grow slightly faster, at 9-11 per cent year-on-year, reaching 75-78 million passengers (leaning towards the lower end of the range), up from 69.6 million in FY2024.

Overall, growth in FY2025 is projected to be restrained compared to the previous year, primarily due to ongoing capacity constraints resulting from over 130 grounded aircraft (excluding the Go First fleet). The prospects for Go First and Jet Airways' revival this year appear bleak, while supply chain complexities are anticipated to persist.

Financially, FY2025 is poised to mirror FY2024 for Indian airlines, with sustained high yields albeit with marginal upward pressure on operating costs, particularly from manpower and maintenance expenses. Fuel and forex rates are expected to stabilise around recent levels.

As a result, the industry is forecasted to achieve record revenues of US$ 19.9 billion, accompanied by a consolidated loss estimated between US$ 0.4 billion to US$ 0.6 billion. However, Low-Cost Carriers (LCCs) are expected to remain profitable, with IndiGo likely to report around US$ 1 billion in profits. Full-Service Carriers (FSCs) are projected to improve financially but will continue to face significant losses due to ongoing restructuring within the Air India Limited Group.

Looking beyond FY2025, CAPA India highlights an anticipated acceleration in growth as supply chain issues ease. However, attention is drawn to emerging skill shortages across the aviation sector, particularly in technical roles such as pilots, maintenance engineers, and technicians. The pilot shortage is expected to exacerbate, further challenged by new Flight Duty Time Limitations that could increase pilot demand by approximately 15%. Addressing these shortages in the short-term remains complex, compounded by potential talent poaching by Gulf carriers like the upcoming Riyadh Air. Inadequate air traffic controllers, as well as shortages in security and safety personnel, also present significant challenges ahead.