Engines stalled, planes grounded: ICRA alerts turbulence in Indian aviation

Indian airlines remain grounded by engine problems and labour gaps, with recovery not expected before FY2026, finds credit rating agency ICRA

The Indian aviation sector is flying through turbulent skies as ongoing supply-chain disruptions and engine-related complications continue to cripple airline operations, according to a new report released by credit rating agency ICRA. 

These recurrent challenges have had a substantial impact on the operational strength of domestic carriers, driving up costs and triggering widespread delays. While a modest recovery is projected for FY2026, the report warned that Indian aviation remains caught in a web of structural challenges impacting both efficiency and profitability.

 

“Challenges in the supply chain and engine failures are impacting industry capacity; the sector has been grappling with supply-chain disruptions and engine failure issues associated with Pratt and Whitney (P&W) engines provided to various airlines,” ICRA said in its report. 

   

Among the most badly hit is Go Airlines (India) Limited, which had nearly half of its fleet grounded in FY2024 due to defective engines. The crisis worsened in January 2025, when the NCLT ordered the airline’s liquidation.

 

Meanwhile, InterGlobe Aviation Limited (IndiGo), India’s largest airline, stated that 60-70 of its aircraft had been grounded as of January 30, 2025, with several affected by powder metal contamination — a defect found in the materials used for manufacturing engine parts.

 

By March 2025, more than 133 aircraft across Indian carriers had been grounded, accounting for close to 16 per cent of the commercial fleet. Although this marked a slight improvement from the 154 grounded planes reported on September 30, 2023, it continued to place heavy pressure on available capacity.

 

This decline in capacity has also had a negative impact on Available Seat Kilometers (ASKM), a crucial industry metric. To make matters worse, the global recall of P&W engines and delays in engine testing processes have slowed fleet restoration efforts.

 

Short-term fixes, long-term costs 

To cope with grounded planes, airlines have resorted to leasing aircraft, primarily through wet leases, to maintain operations. However, this has driven up lease expenses, increased fuel costs, and compromised fuel efficiency, especially with some older aircraft brought in on short-term agreements.

 

Despite these challenges, airlines have found some financial cushioning. Higher ticket prices (yields), strong passenger load factors (PLFs), and partial compensation from engine manufacturers have helped offset some of the financial pressure.

 

But the operational difficulties haven't stopped with grounded fleets. In FY2025, airlines also struggled with a shortage of skilled workers, including pilots and cabin crew. The lack of trained personnel led to frequent delays and cancellations, further disrupting schedules and frustrating travellers.