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COVID-19 impact: Indian aviation sector may lose $4 billion in FY21, says CAPA India

CAPA India, which had earlier pegged the losses at $3.6 billion, also said that the Indian aviation sector could be reduced to two or three players.

July 03, 2020 / 07:43 PM IST
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The Indian aviation sector is likely to lose up to $4 billion in the financial year 2021, advisory firm CAPA India has said, raising the loss estimate from the earlier $3.6 billion.

In a report released on July 3, CAPA India also talked of a higher capitalisation need for Indian airlines, up from $2.5 billion to $3.5 billion.

Critically, the firm said the Indian aviation sector may be reduced to just two to three players, from more than half a dozen now, including Air India, IndiGo, SpiceJet and GoAir.

"Consolidation is looking more likely and will result in a very significant change in the structure of the industry. India may be headed for a two-three airline market if timely recapitalisation does not happen," it said.

Pointing out that the demand in the domestic market was soft, the firm said that the second quarter, like the first, could be a washout. Domestic flights resumed on May 25.


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"Recent traffic has mostly comprised of essential repositioning traffic, with passengers that were stuck in the wrong place when the lockdown was announced returning to their home base. Discretionary travel has been limited, as reflected in the fact that more than 90 percent of bookings have been for one-way travel, compared with 40 percent prior to COVID," the report said.

Though the government has allowed airlines to operate up to 45 percent of their summer schedule but it has made little difference as passenger load hovers around the half-way mark. Fares, which have been capped within a range, have tended to be closer to the lower end of the band, CAPA India said.

Moneycontrol News
first published: Jul 3, 2020 03:53 pm

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