Covid impact on airlines to extend beyond FY22: CAPA

Our Bureau New Delhi | Updated on October 29, 2020

Aviation industry requires $4-$4.5 billion of funding to navigate the crisis

The impact of Covid-19 on travel demand and airlines’ financials is expected to endure throughout fiscals 2021 and 2022 and possibly beyond, which will constrain the industry’s ability to grow, CAPA India has warned in its Executive Summary of the mid-year outlook for India aviation in fiscal 2021.

The aviation advisory has not revised its earlier estimates of the airlines losses for full fiscal year 2021, which is expected to be $4-4.5 billion, with the industry losses estimated at $6-6.5 billion.

CAPA feels that the aviation industry requires $4- $4.5 billion of funding to survive and navigate this crisis.

“The estimated $3-3.5 billion of capital required for airlines comprises $2 billion for full service airlines and over $1 billion for low-cost airlines. The latter includes between $400-500 million from IndiGo’s Qualified Institutional Placement, which may be deferred slightly,” the CAPA report adds.

Decline in domestic traffic

CAPA is of the view that domestic traffic in the second half of fiscal 2021 is expected to be 3-4 crore or a decline of 50 per cent from approximately 6.9 crore in Q2 2020.. This decline is primarily driven by a 60-80 per cent decline in business, Meeting Incentive Conference and Exhibitions (MICE) and leisure travel.

“The projected traffic in the second half (of 2021) represents an average of around 160,000-220,000 daily passengers. Towards the latter part of the year or during peak periods, this could reach a maximum of around 250,000,” the report adds.

Cargo volumes are expected to reach pre-Covid levels much earlier than passenger traffic. In September 2020, international cargo was down just 13.6 per cent year-on-year (compared with -87.8 per cent for passengers), while domestic volumes were down 20 per cent (compared with -65.1 per cent for passenger traffic). Recent economic indicators also suggest that exports are showing a significant recovery,” the report adds.

Published on October 29, 2020

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