Thursday, July 19, 2018

Challenging times ahead for aviation sector as losses rise

New Delhi: It's challenging times ahead for the Indian aviation sector. According to ratings agency ICRA, the aggregate loss of the aviation sector is expected to reach Rs 3,600 crore in 2018/19, up from around Rs 2,500 crore in 2017/18. The reasons for the higher losses include higher aviation turbine fuel (ATF) prices, slowdown in capacity addition, and lower yields.

The report, for instance, says that the market leader IndiGo, which had about 41 per cent share in industry capacity, had slowed down in the adding new capacity in 2017/18. The airline's domestic capacity addition - available seat kilometres (ASKM) - in the last financial year stood at 10.3 per cent, far lower than the 28.1 per cent in 2016/17. IndiGo, over the past one year, has been facing delays in aircraft deliveries, particularly Airbus A320neos, due to technical glitches with engines, and an increased focus on the international operations. The total capacity of Indian carriers stood at 146.8 million in 2017/18.

ICRA estimates the sector-wide capacity additions of 15-17 per cent in 2018/19. "The key driver for the industry capacity growth continues to be the sizeable order backlog...approximately 1,033 aircraft of various sizes and configurations are on order by Indian airlines," the report says.
19/07/18 Manu Kaushik/Business Today