CAPA India Aviation Outlook FY2025 - Mid-Year Update

Each year in March, CAPA India prepares its annual aviation industry outlook for the upcoming financial year, which is supplemented by our mid-year update in October.

On 24-Oct we released our mid-year guidance for the outlook for FY2025, which remains closely aligned with our original projections at the start of the year, continuing our 21-year track record of accurately projecting the outlook for the industry across operating, financial & strategic metrics, even in uncertain environments.

Key highlights are presented below:

• We continue to maintain full-year projection for domestic traffic growth at 6%-8% y-o-y i.e. around 162-165 million pax, with guidance towards the higher end. Capacity constraints remain a bottleneck with around 120 aircraft still expected to be grounded in Mar-2025.

• Our projection for international traffic also remains as per our original forecast at the start of the year, at 9%-11% growth y-oy, or 76-78 million pax. Again with guidance towards the higher end of the range. Both Air India Limited and IndiGo (InterGlobe Aviation Ltd) continue to focus on international expansion despite capacity challenges.

• Airline financials in FY2025 will largely be a mirror of FY2024. Profitability challenges are expected to continue for all except IndiGo. That said, FY2024 did see a 50% reduction in losses at Air India and Air India Express, and Vistara - TATA SIA Airlines Ltd. was close to break-even.

• Our projection for consolidated Indian airline financials remains unchanged, with an expected industry-level loss of USD0.4–0.6bn, despite another large profit by IndiGo. We expect IndiGo to post an estimated profit of ~USD0.75bn (down from our earlier estimate of USD1.0bn). Improved financial performance by Air India is expected to reduce FSC losses from our earlier projection of around USD0.9-1.0bn to USD0.75-0.80bn.

• The capacity crisis has been further accentuated as a result of industrial unrest at Boeing. This has impacted Akasa Air's plans in FY2025 and is likely to impact Air India’s plans in FY2026. Airbus Aircraft deliveries are largely on track but some delays have been observed.

• Since our annual outlook was released in Mar-2024, SpiceJet Limited's recapitalisation has been a highlight, paving the way for a strong carrier to emerge in the next couple of years, even though further recapitalisation and restructuring will be required.

We continue to believe that India is moving to irreversible stability because of two strong principal airlines. Although strong headwinds in the short-medium term due to supply side issues and geo-political concerns, may impact the long term.

CAPA India continues to reiterate that to capitalise on the potential of Indian aviation, a National Civil Aviation Policy 2.0 is required to align fiscal issues, policy and regulation, institutional capability and physical infrastructure with the needs of a modern and dynamic aviation industry.

Given the size and scale of the sector, and the capital to be deployed over the next ten years, it is imperative that this alignment is achieved. 

CAPA India’s annual outlook leverages our 21 years of experience, during which time we have completed more than 1100 consulting and research assignments for 400+ clients across the aviation value chain. Our clients are able to benefit from this experience to better plan and prepare for success in the world’s fastest growing aviation market. #IndianAviation