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Aviation sector: Hoping to hit the runway in 2020

With a slow and strenuous year, there were certain opportunities for the sector that are expected to strengthen the pillars of the aviation industry
Jan 12, 2020 / 11:55 AM IST
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Gaurav Garg

The flight for the aviation sector went through a turbulent patch last year due to various factors ranging from board room battles to the ban on certain airplane models -- the industry withstood a lot, only to hope for a better 2020.

At a recent event, Union Civil Aviation Minister Hardeep Puri said that India’s aviation sector was all set to witness exponential growth in the coming times.

In 2019, the leading companies in the sector had their troublesome story and they also saw tough times as a whole. Indigo saw a battle between the co-founders which made the management weaker for a while. The ban on Boeing 737 Max meanwhile, meant a major setback to the expansion plans for SpiceJet. The company was betting a huge stake of its growth on this airplane model, after all.

During this time the sector also bid adieu to long term player Jet Airways. This not only left several jobless, but also created a temporary vacuum for flights connecting the country and the Middle East.

The state-owned Air India was not far away on this bumpy road. A temporary closing of air space by Pakistan and an ever-increasing debt on its balance sheet has left the airline dried and without any prospective buyers. The government has made an attempt to sell its stake in the airline for the third time but has not attracted much attention. A sale of stake for Air India however might happen in the next financial year.

With a slow and strenuous year, there were certain opportunities for the sector that are expected to strengthen the pillars of the aviation industry. A vacuum in flights to the Middle East gave other players such as IndiGo a scope to expand.

IndiGo is set for take-off for Doha and Dubai and an increase in flight routes is expected to soon follow. We are also witnessing a growth in the regional air connectivity in aviation which presents itself as one of the biggest opportunities for 2020.

Even though the future seems bright for the sector, it still seems far away. Thus, we expect the financial year 2019-2020 to close with airlines on the path of recovery from setbacks that 2019 brought with it.

(The author is Head of Research at CapitalVia Global Research Limited- Investment Advisor)

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol Contributor
first published: Jan 12, 2020 11:55 am

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