Indian Aviation Industry: Present Tense, Future Uncertain

By Outlook

With global travel restrictions, grounded fleets, benched staff, uncertainties in travel schedule, ticket liabilities, and cash burn, the global aviation industry, never had it so bad, and that too, for two consecutive years. And it’s not limited to travel restrictions.

Airlines not allowed to fly to certain destinations, visas not being issued, inbound lockdowns and a ban on Indian travellers by different countries have all led to a chaotic situation. It has also spiraled into severe demand contraction because of job losses and reduced income and a fear psychosis, which might continue to linger even after the pandemic has subsided.

Indian aviation industry too has not been spared its devastating impact Indian airlines alone will incur a loss of $4.1 billion loss in the current fiscal (2021-22), with another $3.9 billion losses reported in the last fiscal, according to a June 3, 2021, report by aviation consultancy and research firm, Centre for Asia-Pacific Aviation (CAPA). Similarly, rating agency ICRA estimates that airports are expected to witness a decline in operating income by 6.1% to Rs 8,400 crore, while reporting an operating loss of nearly Rs 1,700 crore and a net loss of Rs 5,400 crore (64%) in FY 2021. “The overall cash loss for the sector is estimated at around Rs 3,500 crore in FY2021, impacted by a 66% year-on-year slip in passenger traffic amid Covid-induced travel restrictions,” says the report.

No wonder then, the Association of Private Airport Operators (APAO) is seeking a bail-out package from the government because it believes that airports are not generating enough cash to sustain operations and meet their debt obligations. With dwindling cash flows and downgraded credit ratings, airports may find it impossible to make further investments.

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