Domestic airline industry was expected to report a net loss of Rs 15,000-17,000 crore in this financial year (FY23) on account of elevated price of aviation turbine fuel (ATF) and a weak rupee, a report said on Wednesday. 

The losses for the industry in the previous financial year (FY22) were estimated at around Rs 23,000 crore, credit ratings agency Icra said in its report. 

However, the debt levels for the industry were expected to be at around Rs 1 lakh crore (including lease liabilities) as on March 31, 2023, the ratings agency added. 

Any positive or negative movement in the rupee against the US dollar and any increase or decrease in the jet fuel prices have a major bearing on the cost structure of airlines in India. This is because ATF accounts for around 45 per cent of the operational cost of an airline in the country. Besides, as much as 35-50 per cent of the airlines’ operating expenses are driven by the US dollar. 

Two listed airlines – IndiGo and SpiceJet – have reported losses to the tune of Rs 1,064 crore and Rs 789 crore respectively in the June quarter of FY23, primarily owing to weak rupee and higher jet fuel prices. 

According to ICRA, domestic passenger traffic for Indian carriers had reported a healthy 57.7 per cent year-on-year growth at 84.2 million in FY22 on the back of fast pace of vaccination, lower incidence of fresh COVID infections, coupled with declining intensity of the infection. 

“Despite an expected improvement in passenger traffic, the industry is estimated to report a net loss of around Rs 150-170 billion (Rs 15,000-17,000 crore) in FY2023 (as against an estimated net loss of Rs 230 billion – Rs 23,000 crore – in FY2022) due to elevated ATF prices and the recent depreciation of Indian rupee vis-a-vis the US dollar, both of which have a major bearing on the cost structure of airlines,” said Suprio Banerjee, the vice-president and sector head of ICRA.