Aviation think tank CAPA India has predicted a grimmer future (than reported) for Air India in the next two financial years, and urged the government to pursue bold restructuring of the beleaguered national airline, allowing 100 per cent divestment.
In a statement posted on its website on Monday, the respected aviation research advisory envisaged that if not divested, Air India was likely to accumulate further losses. In the process, it would increase its staggering debt, and, in the face of intense competition from low cost airlines, further lose its slipping market share.
Currently at 13 per cent, Air India’s market share could dip below 10 per cent, because, in the next two years, rival airlines like Indigo, Vistara and Spicejet will add more planes. As a result, Air India’s debt burden is likely to increase further from $ 7.5 billion. According to the report, rival airlines are scheduled to take delivery of 120-125 new aircraft in 2019 alone, and over 500 in the next five years. Air India, on the other hand, has plans to induct just nine more aircraft. It said that the carrier’s market share, which, in the past decade, has been gradually slipping from 35 per cent to 13 per cent could further dip under 10 per cent. “The government now needs to pursue divestment with even greater determination, in part because the alternative is far worse,” CAPA India said.
According to CAPA, Air India is expected to lose a total of $ 1.5-2 billion over the next two financial years, in addition to $ 4 billion of public funds that have been used to subsidise the airline since 2012. “It will be politically sensitive to take a more significant haircut than was planned in the Expression of Interest (EoI), but the alternative is to keep pouring more money into the airline indefinitely. The government needs to be prepared to take a bold decision on this for the longterm benefit of public funds,” it said.
05/06/18 Satish Nandgaonkar/Mumbai Mirror
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In a statement posted on its website on Monday, the respected aviation research advisory envisaged that if not divested, Air India was likely to accumulate further losses. In the process, it would increase its staggering debt, and, in the face of intense competition from low cost airlines, further lose its slipping market share.
Currently at 13 per cent, Air India’s market share could dip below 10 per cent, because, in the next two years, rival airlines like Indigo, Vistara and Spicejet will add more planes. As a result, Air India’s debt burden is likely to increase further from $ 7.5 billion. According to the report, rival airlines are scheduled to take delivery of 120-125 new aircraft in 2019 alone, and over 500 in the next five years. Air India, on the other hand, has plans to induct just nine more aircraft. It said that the carrier’s market share, which, in the past decade, has been gradually slipping from 35 per cent to 13 per cent could further dip under 10 per cent. “The government now needs to pursue divestment with even greater determination, in part because the alternative is far worse,” CAPA India said.
According to CAPA, Air India is expected to lose a total of $ 1.5-2 billion over the next two financial years, in addition to $ 4 billion of public funds that have been used to subsidise the airline since 2012. “It will be politically sensitive to take a more significant haircut than was planned in the Expression of Interest (EoI), but the alternative is to keep pouring more money into the airline indefinitely. The government needs to be prepared to take a bold decision on this for the longterm benefit of public funds,” it said.
05/06/18 Satish Nandgaonkar/Mumbai Mirror
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