Due to the ongoing nationwide lockdown to contain the coronavirus caused COVID-19 pandemic, the domestic aviation industry will ‘crash-land’ this fiscal year with a loss of around Rs 24,000-25,000 crore, CRISIL Infrastructure Advisory said on Thursday.
As per CRISIL’s estimates, Airlines will incur majority of the total loss i.e. more than 70% or around Rs 17,000 crore in 2020-21. This will be followed by the airport operators with Rs 5,000-5,500 crore, and airport retailers (including retail, food and beverages and duty-free) with Rs 1,700-1,800 crore.
That would reverse the trend growth of around 11% per annum the industry has logged over the past ten years, making it one of the most adversely affected sectors of the economy, CRISIL said.
CRISIL expects the losses will continue to rise if the travel restrictions continue in major hubs like Delhi, Mumbai, Chennai and Kolkata.
“These are preliminary estimates, and aggregate losses could increase if the lockdown is extended beyond the first quarter. As and when operations resume, overall operational capacity will hover at 50-60% for the rest of the fiscal. Consequently, mergers and acquisitions of airlines, and relook at expansion plans of private and upcoming greenfield airports would be possibilities,” said Jagannarayan Padmanabhan, Director and Practice Leader, Transport & Logistics, CRISIL Infrastructure Advisory.
Prime Minister Narendra Modi-led government initially announced a 21-day nationwide lockdown on March 23, which was later extended till May 3. Now the lockdown has been further extended by another two weeks till May 17.
During the first two phases, government only allowed delivery of essential goods and services, while the other business remained closed. But with the ongoing i.e. third phase of the lockdown, government has allowed certain businesses, standalone shops and companies to restart their functions.
However, the government is yet to take a decision on the airline industry. Reports suggest that the government is working on a stimulus package for the sector.