Capa India says second wave could lead to aviation industry collapse
NEW DELHI : The ongoing second wave of coronavirus infections, which has brought the country’s healthcare system to its knees, could precipitate a collapse in the domestic aviation sector, aviation consultancy firm Capa India said in a report on Monday .
It will also speed up industry consolidation, which will result in two to three airlines operating in the domestic sector, compared to six major airlines and three regional carriers that currently operate in space, he added.
“Most Indian airlines were already very vulnerable before covid, with weak balance sheets and insufficient liquidity. Covid inflicted massive losses and a growing debt burden on carriers who were structurally ill-equipped to absorb this impact,” indicates the report titled “Main Trends”. in Indian Aviation in FY2022: Impact of Second Wave. ”
“The magnitude of the challenge is reflected in the fact that Indian carriers under-recovered nearly $ 70 per passenger in FY21,” he added.
As it stands, fewer Indians have taken off due to the new surge in covidus cases across the country for the sixth consecutive week of the week ending May 1.
The average number of daily flyers stood at 126,000 for the week ending May 1, up from 152,000 for the week ending April 24 and less than 193,000 for the week ending April 17, according to a report. of ICICI Securities.
The Average Passenger Fill Factor (PLF), an airline industry metric that measures the amount of an airline’s passenger carrying capacity in use, stood at around 50% during the week ending on May 1, the report added.
The industry as a whole will report serious losses in FY22, similar in magnitude to FY21, with a risk of a serious downside in the event of a prolonged second wave or the emergence of a third wave, the report said, adding that many Indian airlines will struggle to recover from two consecutive years of such massive losses.
“The severity and impact of the second wave will practically shut the doors of most aerospace companies in terms of access to lenders, in the absence of government intervention, which is unlikely,” he said. added.
CAPA India predicted last October that the Indian aviation industry would lose a total of $ 6 to $ 6.5 billion in FY21, of which airline losses would amount to $ 4 to $ 4.5 billion.
IndiGo will be the only Indian carrier to emerge from the coronavirus crisis significantly stronger than the competition, largely due to its very strong track record, the report says.
“Consolidation is inevitable and will be of a strategic nature. It could result in a 2-3 air transport system in the short to medium term,” he said, adding that the second wave is likely to accelerate the process of consolidation and balance higher strategic level.
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