India's aviation sector may incur losses of $3.3-3.6 billion in Q1FY21: CAPA India

The Centre for Asia Pacific Aviation (CAPA) India in its preliminary report has said that India's aviation sector may incur losses of $3.3-3.6 billion in the Q1 (April-June) of 2020-21 in the eventuality of all air services including domestic remain shut until June due to coronavirus outbreak. It pointed out that the pandemic has had a significant impact on the aviation industry due to the stringent border controls by a host of countries and imposition of the travel ban on the people of other nationalities to contain the virus infection. 

The CAPA also sought urgent government intervention and coordinated industry response to address all the requirements of the aviation industry. It noted that the airline sector losses are expected to be around $1.75 billion while that of the airports and concessionaires at around $1.50-1.75 billion and another $80-90 million losses of the ground handling companies. Noting that the domestic airline sector was already vulnerable even prior to the advent of COVID-19, it said most Indian airlines have not structured their business models to be able to withstand even regular shocks, such as elevated fuel prices or economic downturns, let alone once-in-a-century events.

According to the CAPA, with few exceptions, Indian carriers have weak balance sheets and precarious levels of liquidity. It added that airlines have generated cash to stay afloat through advance sales or sale-and-lease back margins (and government infusion in the case of Air India), but with no cushion to be able to withstand downward cycles.