Domestic airlines industry expected to fly back into profitability next fiscal: CRISIL

As per the report by credit rating agency CRISIL, the industry is also likely to pare its net loss by as much as 75-80% year-on-year to ₹3,500-4,500 crore this fiscal, compared with around ₹17,500 crore last fiscal.

Domestic airlines industry is expected to fly back into profitability next fiscal, for the first time since the outbreak of COVID-19, amid easing cost pressures and reduction in leverage to support credit profiles, a report said on March 1.

As per the report by credit rating agency CRISIL, the industry is also likely to pare its net loss by as much as 75-80% year-on-year to ₹3,500-4,500 crore this fiscal, compared with around ₹17,500 crore last fiscal.

“Strong recovery in passenger traffic and easing cost pressures are supporting this turnaround in operating performance of airlines,” CRISIL said. The projections are based on Crisil Ratings analysis of three airlines that account for around 75% of domestic air traffic.

Domestic and international passenger traffic recovered to 90% and 98%, respectively, in the nine months through December this fiscal, compared with the corresponding period of fiscal 2020 (pre-pandemic).

Business and leisure travel rebounded strongly even as international scheduled services resumed, it said and added that the festival season has accelerated recovery in the second half.

This pace is likely to be maintained next fiscal, as the Indian economy remains resilient in the face of global headwinds, CRISIL Ratings said. “The removal of fare caps is also helping airlines pass on cost increases,” it added.

"Next fiscal, we expect passenger traffic to cross the pre-pandemic level and pricing to remain higher by 20-25% over those levels. Consequently, airlines are expected to clock 25-30% revenue growth next fiscal vis-a-vis pre-pandemic," said Gautam Shahi, Director, CRISIL Ratings.