SUMMARY

The article from The Hindu BusinessLine titled "Airline industry hits an air pocket" discusses challenges faced by the Indian airline industry.

Key points 

1. Financial Struggles: Indian airlines are grappling with losses due to high operational costs, intense competition, and low airfares despite strong passenger demand. For instance, IndiGo reported a 22% drop in net profit for Q2 FY25, while SpiceJet continues to face financial distress.
2. Market Dynamics: The industry is highly competitive, with IndiGo holding a 62% market share. Other players like Air India and Vistara (now merged) and smaller carriers like Akasa Air are vying for space, but profitability remains elusive for most.
3. Cost Pressures: High aviation turbine fuel (ATF) prices, which account for 40-50% of operating costs, and a depreciating rupee impacting leasing and maintenance costs are squeezing margins.
4. Capacity and Demand: While passenger traffic is robust (153 million passengers annually, projected to reach 300 million by 2030), airlines are unable to raise fares significantly due to price wars, leading to unsustainable yields.
5. Structural Issues: The article highlights inefficiencies like high airport charges, complex tax structures, and regulatory hurdles, which further strain airline finances.
6. Future Outlook: The sector needs consolidation, better pricing strategies, and government support (e.g., including ATF under GST) to achieve sustainable growth.

NEWS LINK