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Last Updated : Apr 06, 2020 04:15 PM IST | Source: Moneycontrol.com

Coronavirus pandemic | Aviation industry to shrink, says CAPA India

About 250 of the 650 aircraft could become surplus, said the firm.

Representative image
Representative image

Indian aviation sector is likely to shrink significantly, with the first quarter expected to be a 'virtual washout', and with 250 of the total 650 aircraft becoming surplus in the next 12 months, according to a report by advisory firm CAPA India.

Not only will the airlines look to return these aircraft - but with limited success - the carriers will also look to delay delivery of new planes for want of demand in the industry.

"For India to return to a pre-COVID operational fleet of 650 aircraft is likely to take up to 12 months from the time that restrictions are lifted, and this may be conservative," CAPA India said, in its third report since the industry was disrupted due to COVID-19.

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Chances of these planes becoming surplus are high as the industry prepares to resume operations once the lockdown is lifted, which could be gradual.

"This process is expected to occur in a staggered manner and may not follow a straight line, particularly when it comes to international travel," CAPA India said.

As the firm points out, resuming operations will be a much more complex exercise, than suspending them.

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"When services resume, airlines will have to publish a schedule, which will require decisions to be made with respect to which routes to launch first and with what level of capacity, without knowing until much closer to the date of departure whether demand actually exists.

"Some carriers may decide to operate very much a skeleton network only, on the basis that it may be better to keep aircraft grounded to conserve cash, until there is greater clarity on how the demand for travel is recovering," CAPA India said.

As of now, there is uncertainty on how the lockdown will be phased out. Though flight bookings have begun for travel from April 15 on wards, rise in the number of those reported infected, makes travel a bleak possibility.

The death toll in India has crossed around, and more than 4,000 have been reported to be infected.

Washout quarter

The second quarter is seasonally weaker than the others. Now coupled with the lockdown and low appetite for travel among fliers, the first three months of the financial year could be a 'virtual washout,' says CAPA India.

"A gradual path towards normality could be expected during Q3 and Q4," it said.

Giving estimates for the whole year, the advisory firm said that domestic traffic is expected to decline from an estimated 140 million in FY2020 to around 80-90 million in FY2021. "International traffic is expected to fall from approximately 70 million in FY2020 to 35-40 million in FY2021, and possibly less," it said.

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First Published on Apr 6, 2020 04:13 pm
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