Airlines not structured to bear shock

Indian aviation sector is projected to suffer US$3.3-$3.6 billion loss in the first quarter of the next financial year if flight services are grounded till June-end as part of the suspended operation of commercial flights till 15 April 2020 by the Government to prevent contain the spread of coronavirus infections.

Project the loss on 25 Mar 2020, CAPA India has also called for a coordinated national aviation industry response to the current situation.

The airlines are expected to post a loss of around US$1.75 billion while airports and concessionaries could suffer a loss of US$1.50-1.75 billion, said the aviation consultancy in a report on 25 Mar 2020.

Ground handlers are estimated to post a loss of US$80-90 million, reported Press Trust of India citing the CAPA report.

The combined loss for the sector is between US$3.3-$3.6 billion in the first quarter of the next financial year. Based on current exchange rates, the losses would be Rs.25,000 crore to Rs.27,000 crore.

CAPA India has based the projections on the assumption that all domestic and international operations remain grounded until 30 June 2020.

The extension of the domestic lockdown until at least 15 Apr 2020 is the right decision by the Government, it noted.

However, the April-June quarter, traditionally one of the stronger quarters of the year for Indian airlines, is likely to be a washout, said CAPA India.

Furthermore, most Indian airlines have not structured their business models to withstand even regular shocks, such as rising fuel prices or economic downturns, let alone once-in-a-century events likely the deadly virus, COVID-19.


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