Aviation

Coronavirus impact: Vistara or AirAsia India? Tata Group must pick one as losses mount

It’s going to be bloodbath in the aviation sector as a result of Covid-19 outbreak. With passenger operations of all commercial airlines coming to a grinding halt till April 14, probably even beyond, the industry enters a phase of large-scale disruption.

According to aviation consultancy firm CAPA, Covid-19 would cost the sector $3.6 billion (Rs 27,200 crore) in just three months. As a result, Tata Sons might be forced to operate just one airline from amongst the two (Vistara and AirAsia India) that it is operating now.

“This may be the right time for Tata Group to rationalise its airline portfolio. This event is going to cripple the entire industry, and Tata Group will be in a position to back just one airline instead of two,” says Kapil Kaul, CEO (South Asia), CAPA.

As per data submitted with the ministry of civil aviation, both AirAsia India and Vistara have continuously posted operating losses between FY15 and FY19. Vistara, for instance, posted (provisional) operating losses of Rs 846.1 crore in FY19 in comparison to AirAsia India’s Rs 703.04 crore operating losses in the same financial year. In FY19, operating losses of nearly all large carriers, including Vistara and AirAsia India, swelled considerably as compared to the previous financial year.

“Post Covid-19 world is going to be entirely different. The biggest worry is that if this situation gets prolonged, some airlines would shut down.

The stronger airlines, especially IndiGo, would likely withstand the impact and restart services with depleted operations. But there seems to be bleak future for loss-making carriers,” says an aviation analyst.

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