According to a report from credit rating agency ICRA, the net loss to India's domestic airline industry this fiscal year is expected to be between 150 and 170 billion rupees. This expected loss is due to the high price of aviation turbine fuel (ATF) and a weak rupee.

In India, ATF represents about 45 percent of an airline's operating costs. In addition, 35-50 percent of an airline's operating costs are determined by the US dollar, so a weak rupee has a significant impact.

The industry's losses over the past fiscal year amounted to approximately Rs 230 billion.

Debt to the industry on March 31, 2023 is estimated to be around Rs 1 trillion. These include lease obligations. In the June quarter, IndiGo and SpiceJet posted losses of Rs 10.64 billion and Rs 7.89 billion, respectively, mainly due to a weak rupee and more expensive ATF.

ICRA said domestic passenger traffic grew at a healthy 57.7 percent year-over-year to 84.2 million in FY22.

In the first quarter of FY23, domestic passenger traffic was 2.04 times higher to 32.5 million year over year. It lagged about 7 percent from pre-Covid levels (Q1 FY20).

With business returning to normal, domestic passenger traffic is expected to grow 52-54 percent year-on-year in FY23. Domestic traffic is expected to reach pre-Covid levels in FY24.

Although the Department of Civil Aviation has lifted the fare restrictions effective August 31, a sharp increase in air fares will be deterred by fierce competition and airlines' efforts to maintain and/or expand their market shares, the agency said.