Why Indian Airlines Aren't Making Money Despite the Travel Boom

In January this year, the domestic air passenger traffic in India was over 15 million, according to credit ratings agency ICRA. This was almost a 15% increase over last year and was 18% more than the pre-Covid levels recorded in January 2020. Meanwhile, Indian airlines’ capacity deployment during the month increased 11%. 

At the same time, ICRA expects the industry to report a net loss of INR 20-30 billion ($230-346 million) in the current fiscal year and the next year, down from a net profit of about INR 16 billion ($185 million) in the 2024 financial year. This is due to expected pressure on airlines in maintaining adequate passenger load factor amid high prices of aviation turbine fuel (ATF). 

“Further, the higher borrowing costs, due to increased lease liabilities with the scheduled aircraft deliveries for select airlines, are likely to increase the interest burden,” it noted. Depreciated value of the Indian Rupee as against the U.S. Dollar is also expected to add to the financial woes of the airlines. 

It added that despite these factors, the expected losses are significantly lower than losses of INR 235 billion ($2.7 billion) reported in fiscal year 2022 and INR 174 billion ($2 billion) in 2023 fiscal. 

Outlook Stable: Despite the cost struggles, ICRA maintained a stable outlook for the industry. The agency expects the domestic air passenger traffic to increase moderately and the cost environment to remain stable nonetheless. 

“Moreover, the industry witnessed improved pricing power during the 2024 financial year, reflected in the higher yields (over pre-Covid levels) and the revenue per available seat kilometre–cost per available seat kilometre (RASK–CASK) spread of the airlines.” 

It also added that international passenger traffic for domestic airlines is expected to increase by 15-20% in the ongoing fiscal year. Between April and December 2024, Indian airlines carried close to 15 million international passengers, a 14.5% increase year-on-year and nearly 42% more than pre-Covid levels. 

Korea Tourism Organization Strengthens India Efforts

South Korea’s tourism board Korea Tourism Organization (KTO) is strengthening its efforts to attract Indian travelers. It has signed two agreements with Indian travel companies EaseMyTrip and Thomas Cook India. 

KTO has entered into a two-year partnership with Thomas Cook India and its group company SOTC Travel to increase its visibility among Indians. Under the agreement, KTO and Thomas Cook India will work to develop tailor-made travel experiences for Indian travelers, catering to leisure, business, and MICE tourism. 

Online travel agency EaseMyTrip will also create a dedicated South Korea microsite, featuring curated itineraries, essential travel information, and recommendations tailored towards Indian tourists. Apart from that, the two travel companies will also undertake co-branded marketing initiatives, digital campaigns, and content collaborations to showcase Korea. 

Air India Expands Codeshare Agreement With Lufthansa Group

Full-service airline Air India is expanding its codeshare agreement with German carrier Lufthansa Group. Under the move, Air India is entering into a new codeshare agreement with Lufthansa Group’s Austrian Airlines, and expanding codeshare with Lufthansa Airlines and Swiss International Air Lines (SWISS). 

With this, the total number of codeshare routes between Air India, Lufthansa and SWISS will increase from 55 to 100. Moreover, Air India and Austrian Airlines codeshare agreement covers an additional 26 routes. Consequently, Air India’s international network now includes 26 European destinations beyond its gateway destinations of Frankfurt, Vienna, and Zurich. 

In a joint statement, Air India and Lufthansa Group said that they will be progressively adding more destinations to the codeshare arrangements.

Odisha To Promote Itself as Wedding Destination

Odisha will formulate a policy that will develop the state as a preferred wedding destination, deputy chief minister Parvati Parida said on Saturday. Talking about the state's diverse topography and heritage including beaches, hills, mountains, coastline, and temples, she said efforts are being made to promote these regions as destination wedding venues. 

The "Wed in Odisha" policy would work to boost the economy of the state, she said, adding that necessary infrastructure, including hotels would be built to cater to that segment. 

“Odisha has beautiful temples, which can be converted as destination weddings. We will identify the possible temples which can be promoted for destination weddings,” Parida said.

Apart from this, Odisha is also planning to roll out a homestay policy and an adventure sports policy to boost its tourism avenues.

Atmosphere Hotels & Resorts Debuts in India

Hospitality company Atmosphere Hotels & Resorts has made its debut in India with the opening of its first couples-only hotel called Sadar Manzil Heritage by Atmosphere Bhopal. The 22-key property has an all-women service team. 

Atmosphere operates multiple properties in Maldives and is now making its entry into India. The company has nine more properties in its India pipeline set to open over the next three years. These include properties in Coorg, Nagpur, Darjeeling, Kolkata, Bhubaneswar, Kannur, and Gurugram.