Sunday, August 23, 2020

Govt help must for airline survival, Indian domestic passenger traffic to drop over 60% in FY 21: CAPA

Mumbai: As against 137 million Indian domestic passengers in FY 20, the projected passenger traffic for FY 21 is a bare 40-50 million, according to estimates drawn by global consultancy firm, Centre for Asia Pacific Aviation (CAPA). Consequently, the country’s airlines could still have 250-300 surplus aircraft by March 2021, it said putting the consolidated loss for the Indian airline industry at an unprecedented $4 to 4.5 billion in FY 2021.

"Continuing uncertainty with respect to state-by-state quarantine restrictions and the persistent shadow of the possibility of new lockdowns, exacerbates underlying demand risks. Limited hotel capacity and surface transport options further deter travel," said the CAPA note on financing Indian aviation sector in the post Covid era. The note stressed the need for industry and government collaboration as an essential for survival and revival.

"It is clear that the industry cannot absorb such dramatic declines in traffic alone. Industry and government collaboration is essential for survival and revival," said CAPA. Referring to US government support, CAPA said that the US CARES support programme was developed with the objective of ensuring that American carriers would be in ‘good shape’ post-Covid. The government recognised that the crisis was not of the industry’s making, CAPA said adding that similar view was taken by other governments in other markets that announced company or industry-specific packages.

In India, excluding IndiGo, the cash position of the industry as on March 31, 2020 was just $200 million (IndiGo had $1.36bn), said CAPA, "The current low oil prices and excess liquidity, both globally and in India, would ordinarily have been positive for the sector. But the industry will not be able to fully benefit or raise funds due to structural issues including continuing uncertainty," it said.

Airline and airport promotors must step forward and present well-thought recapitalisation plans to fully fund both FY 21 and FY 22 if they are to emerge from this crisis, the firm said. "Implement all possible measures to counter the demand and revenue challenge through cost reduction, fleet replacement etc. Promoters must provide confidence to the financial community," it said.
23/08/20 Manju V/Times of India
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