Ongoing Disruptions Impacting the Indian Aviation Sector
India’s aviation industry is currently facing significant challenges, primarily due to ongoing supply chain disruptions and engine-related issues. A recent report from the Investment Information and Credit Rating Agency (ICRA) highlights that these problems have severely impacted the operational capacity of airlines. The situation has worsened with the global recall of Pratt & Whitney (P&W) engines, forcing airlines to lease additional aircraft to maintain their services. This has led to increased costs and operational inefficiencies, affecting major players like IndiGo and Go Airlines.
Supply Chain Disruptions and Engine Failures
The Indian aviation sector is grappling with persistent supply chain disruptions and engine failures, particularly concerning Pratt & Whitney engines. According to the ICRA report, these issues have significantly hampered the industry’s capacity to operate efficiently. Airlines have been forced to ground numerous aircraft due to defects in the raw materials used for engine parts. IndiGo, one of the largest carriers in India, has reportedly grounded around 70 aircraft as a direct result of these defects. The situation has been compounded by delays in testing and the global recall of P&W engines, which has left airlines scrambling for solutions.
To mitigate the impact of grounded fleets, airlines have turned to leasing additional aircraft, often through wet lease agreements. However, this strategy has its drawbacks, as it typically involves older aircraft models that are less fuel-efficient. Consequently, airlines are facing rising lease rentals and operating costs, which further strain their financial resources.
Impact on Major Airlines
The ongoing crisis has had a particularly severe impact on major airlines in India. IndiGo has been one of the hardest hit, with a significant portion of its fleet grounded due to engine-related issues. Another airline, Go Airlines, has faced its own set of challenges, leading to a liquidation order from the National Company Law Tribunal, effective January 2025. Go Airlines has been forced to ground nearly half of its fleet in the fiscal year 2024 due to faulty engines, highlighting the widespread nature of the crisis.
As of March 2025, approximately 133 aircraft operated by various Indian airlines were out of service, representing nearly 16% of the total fleet. While this number shows a slight improvement from the 154 grounded aircraft reported in September 2023, it still poses a significant challenge to the industry’s overall capacity and operational efficiency.
Financial Strain and Operational Challenges
Despite the ongoing challenges, the Indian aviation sector has found some relief through strong ticket pricing and high passenger load factors. These factors have helped cushion the financial strain on airlines to some extent. Additionally, partial compensation from engine manufacturers has provided some financial relief. However, the industry continues to face substantial operational difficulties, including staff shortages, particularly among pilots and cabin crew. These shortages have led to frequent flight delays and cancellations, further complicating the situation for both airlines and passengers.
Looking ahead, while some recovery is anticipated in the fiscal year 2026, the Indian aviation sector remains under considerable pressure. The combination of supply chain issues, engine failures, and staffing shortages continues to impact operational efficiency and profitability, leaving airlines to navigate a challenging landscape.
Future Outlook
The future of India’s aviation industry hinges on resolving the ongoing supply chain and engine-related issues. As airlines work to stabilize their operations, the focus will likely shift towards enhancing operational efficiency and reducing costs. The anticipated recovery in FY2026 may provide some respite, but the sector must address the underlying challenges to ensure long-term sustainability. With the global aviation landscape evolving, Indian airlines will need to adapt to remain competitive and meet the growing demands of air travel in the region.
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