The domestic airline industry is suffering major losses this fiscal year. It is expected to post a net loss of about ₹7,800 crores in fiscal 2020. Previous estimates projected a net loss of approximately ₹10,000 crores in fiscal 2019, according to credit rating agency ICRA.
Kinjal Shah, Vice-President, and Co-Head, Corporate Sector Ratings, ICRA said: “Excluding Air India, the rest of the industry is expected to report a net loss of around ₹1,500 crores in the fiscal year 2020 with a total debt of approximately ₹7,000 crores as on March 31, 2020. The industry’s prospects are expected to gradually improve, contingent on the movement in aviation turbine fuel prices.”
Shah also added, “Many of the industry players have weak balance sheet structure; and with continued losses in the near term, the industry will need approximately ₹20,000-22,500 crore equity infusion over the next three years.”
Domestic air passenger traffic to be lower
The ICRA is also expecting domestic passenger traffic in the fiscal year 2020 to be lower at 4.5 percent. This comes after five years of double-digit growth. A reason for this decline in domestic traffic is that many domestic airlines are focusing on expanding their international routes.
The ICRA also released a statement speaking about the present aviation situation. The statement said, “Improvement in the core growth drivers like economic environment, tourism demand and regulatory support is essential for improved passenger traffic growth. Though there have been steps towards improving airport infrastructure, the pace of implementation remains a key concern.”
India’s airline industry has been plagued with multiple issues in the recent past. IndiGo and GoAir, two of India’s leading airlines have been struggling with repeated snags in Pratt and Whitney (P&W) engines on their fleet of Airbus 320neo aircraft. SpiceJet has been impacted by the grounding of Boeing 737 MAX planes. Debt-ridden Air Asia is facing an uncertain future after a failed attempt at privatization.
