Covid casts pall on all segments of Indian aviation - Jonathan Cartu Industrial & Residential Real Estate Firm
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Covid casts pall on all segments of Indian aviation

Covid casts pall on all segments of Indian aviation


NEW DELHI :
Travel, especially aviation, has been one of the hardest hit by the global outspread of covid-19, which has left thousands dead and millions sick globally. Cash-strapped Indian airlines have sought for a bail out package from the government, as the sector stares at job losses and closure. Most Indian airlines have not structured their business models to withstand even regular shocks, such as elevated fuel prices or economic downturns, let alone once-in-a-century events (like covid-19), aviation consultancy firm CAPA India said in a recent report. As things stand, aviation sector in India remain grounded as the country battles to contain covid-19. We tally some of the numbers that stand out.

75 – 90 crore per day losses: Indian airlines are losing about 75-90 crore daily during the shutdown. All Indian major carriers have already started undertaking salary cuts for their employees to cut costs. However, until the cash inflows resume, the airlines will require funding support to meet their expenses.

“Considering the operating expenses of the Indian aviation industry in FY2019, and that about 35-42% of their expenses are fixed in nature, it is estimated that the industry will report a net loss of about Rs. 75-90 crore per day of shutdown of operations.” said Kinjal Shah, Vice President, ICRA.

$3.3- 3.6 billion loss incurred by the Indian aviation industry: Total losses to be incurred by Indian aviation sector, including airlines, airports, and ground handling industry during April- June 2020 quarter. While airlines are expected to lose $1.75 billion during the quarter, airports and concessionaires are expected to lose $1.50-1.75 billion during the period and ground handling companies are expected to lose $80-90 million.

Airports to operate below 50% capacity 50%: Indian airports are likely to operate below 50% capacity till June due to travel restrictions to contain the spread of covid-19. Even post the lift off the nation-wide lockdown passenger growth will face a sharp contraction considering the inhibitions of travelling anywhere till the pandemic scare has been settled fully in the domestic regions and internationally.

30-50% decline in domestic traffic: Estimated decline in domestic and international traffic during FY 21, as compared to the previous year. Domestic traffic is expected to decline from an estimated 140 million in FY2020 to around 80-90 million in FY2021. International traffic is expected to fall from approximately 70 million in FY2020 to 35-40 million in FY2021, and possibly less. “Even if the operation resume in the coming month, the travel appetite is expected to remain muted for much of the calendar year. Hence, airlines will be forced to lower capacity,” said an official of a no-frill airline.

65% decline in occupancy at hotels: In the third week of March 2020, since the the imposition of lockdown, the hotels’ sector witnessed a decline of more than 65% in occupancy levels countrywide as compared to the same period of the previous year, global real estate services JLL India in a recent report. The July-December 2020 period is also expected to see weak room occupancies due to intensification of travel restrictions around the world to contain covid-19.

66.8% decline in aviation activity: Based on the number of daily flights tracked by Flightradar24, global aviation activity during April has declined by 66.8% over the last month. Mosts countries globally have stopped international flights while grounding or limiting domestic flights. India has grounded both domestic and international flight operations. While domestic flight operations could resume next month in India, international flights could re-start only after July.

*Data credit- CAPA India, FlightRadar24, ICRA, JLL India, CARE Ratings

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Commercial Real Estate Jon Cartu

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