‘Aviation sector’s expectation of govt bailout unrealistic’

The aviation industry’s high expectations that the government will bail out the sector may be “unrealistic,” CAPA said on Monday.

The aviation advisory, however, does put up some scenarios wherein the government can help industry, like by providing a moratorium on airport and en route charges, on interest and principal payments, and on tax obligations.

In its third update on COVID-19 & the State of the Indian Aviation Industry, CAPA says it is likely to take up to 12 months from the time that the restrictions put in place as a result of coronavirus are lifted for Indian airlines to return to a pre-Covid operational fleet of 650 aircraft. Its estimates show that the airlines could have an estimated 200-250 surplus aircraft in their fleets for the next six-to-12 months.

Starting April-end this year, Indian carriers are initially expected to seek to return up to 100 aircraft to lessors, especially older equipment and those that may be closer to the expiry of their terms. It says that a gradual path towards normality could be expected during Q3 and Q4.

“The total fleet size of 400-450 aircraft would still mean that the current fleet of 650 represents a surplus of 200-250 aircraft for a period of 6-12 months. This may even be optimistic. All of the projections in this report assume that travel restrictions are mostly lifted by the end of the first quarter,” the report says, cautioning that if the lockdown is extended, then these estimates would be subject to revision.

It added that projections are complicated as restrictions are unlikely to be lifted in totality overnight. Instead, this process is expected to occur in a staggered manner and may not follow a straight line, particularly when it comes to international travel.

CAPA estimates that domestic traffic is expected to decline to between eight and nine crore passengers in fiscal 2021 from 14 crore in fiscal 2020 while international traffic is expected to fall to between 3.5 and four crore passengers in fiscal 2021, from 7 crore previously.