Indian aviation industry continues to face Supply-chain, engine failure issues: Report

New Delhi: The Indian aviation industry continues to face serious disruptions due to the ongoing supply-chain issues and engine-related problems, according to a recent report by credit rating agency ICRA. These challenges have significantly impacted the operational capacity of airlines, leading to higher costs and operational delays.

The report said, "Supply-chain challenges and engine failure issues impact industry capacity, the industry has been facing supply-chain challenges and issues of engine failures for the Pratt and Whitney (P&W) engines supplied to various airlines". It added that Go Airlines (India) Limited was among the worst-hit, grounding nearly half of its fleet in FY2024 due to faulty engines. The airline was finally ordered to be liquidated in January 2025, by the National Company Law Tribunal (NCLT). 

Another major airline, InterGlobe Aviation Limited (IndiGo), had around 60-70 aircraft grounded as of January 30, 2025. This included aircraft affected by powder metal contamination, a defect in materials used to make engine parts. As a result, approximately 133 aircraft belonging to select Indian airlines were grounded in March 2025, which accounted for nearly 16 per cent of the total fleet. Although this number is slightly better than the 154 grounded aircraft as of September 30, 2023, it still represents a major blow to the industry's capacity. These capacity constraints have affected the available seat kilometre (ASKM), a key industry metric used to measure airline capacity. The global recall of P&W engines and delays in testing by the manufacturer have made matters worse. Airlines are now forced to lease additional aircraft--mostly through wet leasing arrangements--to make up for the grounded fleet. This has increased lease rentals, operating costs, and reduced fuel efficiency, especially since some of the replacement aircraft are older models taken on spot leases. Despite these headwinds, the industry has seen some support from healthy ticket pricing (yields), high passenger load factors (PLF), and partial compensation from engine manufacturers. These factors have helped offset the financial burden to some extent. Adding to the operational troubles in FY2025 were staff shortages, particularly pilots and cabin crew. This led to frequent flight delays and cancellations, further affecting capacity and causing inconvenience to passengers. While some improvement is expected in FY2026, the Indian aviation sector continues to grapple with multiple challenges that are affecting its efficiency and profitability.