Monday, August 06, 2018

Airlines may face $50 billion worth financing challenges on fleet expansion; here’s why

Even though demand is on an upward trend in the country’s aviation sector, operators face challenges when it comes at fleet expansion. The airlines functioning in India require huge capital worth $50 billion to take the scheduled delivery of ordered planes over the coming nearly ten years, PTI reported citing a report by Sydney-based aviation think-tank Centre for Asia Pacific Aviation (CAPA).

“Positive market conditions have led Indian carriers to place bets on expansion on an unprecedented scale, with as many as 723 aircraft ordered since 2014 and more orders expected,” CAPA report said. Out of the order of 1,055 aircraft, around 100 planes are to be delivered to the carriers every year for the coming 5 years, CAPA report said. It requires $50 billion of financing to support projected deliveries until 2027, report added.

Even though aviation sector has recovered marginally in the past, various challenges are still plaguing its health. “On the cost front, Indian carriers pay some of the highest fuel taxation in the world and also incur taxes on aircraft leases. While on the supply side, infrastructure and skills shortages (particularly commanders) are potential constraints on growth,” PTI reported citing CAPA report.

In the last three years, India’s domestic market has grown at around 20 percent.
06/08/18 Financial Express