Engines Down, Profits Plunge: ICRA Warns of Prolonged Turbulence in Indian Skies

India's aviation industry is facing severe turbulence as ICRA's latest report forecloses chronic engine failures and supply chain snags causing a substantial chunk of the commercial fleet to be grounded. More than 133 aircraft—16% of India's entire fleet—were grounded by March 2025, a crisis that has primarily been caused by chronic problems with Pratt & Whitney (P&W) engines and global supply chain bottlenecks.

 

Key Highlights:

 

Grounded Fleets: IndiGo, India's largest carrier, had 60-70 planes grounded as of January 2025 because of powder metal contamination in engine components. Go Airlines (India) Limited was affected even more severely, with almost half of its fleet grounded in FY2024, which eventually resulted in its liquidation in January 2025.

 

Capacity Crunch: The grounding of planes has reduced available seat kilometers (ASKM), putting pressure on airline capacity and causing widespread cancellations and delays. Airlines are increasingly having to wet-lease older planes, increasing operating expenses and decreasing fuel efficiency.

 

Financial Fallout: ICRA estimates net industry losses of ₹2,000–3,000 crore in FY25 and FY26, reversing last year's narrow profit. Persistent high aviation turbine fuel (ATF) prices and rupee depreciation are continuing to compress margins.

 

Passenger Growth During Crisis: In spite of these losses, domestic passenger traffic increased by 7.8% in FY25, underscoring strong demand. However, personnel shortages and operational bottlenecks continue.

 

Outlook: Although modest growth and stable outlook are predicted for FY26, ICRA warns that recovery will be slow, dependent on addressing supply chain and engine reliability challenges.

 

Source: Business Standard, Millennium Post, ICRA