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Last Updated : Jul 20, 2019 08:23 AM IST | Source: Moneycontrol.com

Aviation Industry heavyweights to find support in reviving from current crisis

Budget 2019 promised various norms to help lift the beleaguered sector and fulfil the dream of making India a “global hub of aircraft financing and leasing activities”.

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Gaurav Garg

The aviation industry has recently garnered a lot of attention – a little due to boardroom feuds, a little because of companies bidding adieu and a little because of questions regarding the industry’s future.

The industry has seen a lot of crisis-like situations that have made people doubt various aspects of the aviation industry in this country. The entire industry has a high fixed-asset cost in general which keeps the profit margins very narrowed down anyway. This, coupled with one of the oldest airlines - Jet Airways - closing, has made the situation worse. What added to this is the recent boardroom feud that has been making headlines for InterGlobe Aviation Ltd. where one of the co-founders raised questions the way the management works. It has now led to the Ministry of Corporate Affairs and SEBI to be involved and check whether the allegations have any substance to them.

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Among all the issues that have been giving the industry a negative outlook, there has been a silver lining with Pakistan Airspace Management opening its airspace for aircrafts coming from India for international destinations and vice versa. This news would help the industry save a cost of more than Rs 6,500 crore and, probably, even restart a few flights that were initially stopped due to the heavy costs of keeping them functional.

Budget 2019 also promised various norms to help lift the beleaguered sector and fulfil the dream of making India a “global hub of aircraft financing and leasing activities”. The finance minister has also allocated Rs 6,602 crore to the civil aviation industry which should act as a catalyst in reviving the industry.

With all the downfalls, the industry has recently witnessed these positives. Although these might not be enough to compensate for all the wrongs, these seem big enough for one to have bullish hopes in the months going forward for the Indian aviation industry.

(The author is Head of Research at CapitalVia Global Research Limited.)

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First Published on Jul 20, 2019 08:23 am
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