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Uncertainties around the duration of the restrictions will further hurt airline business. Photo: Ramesh Pathania/mint
Uncertainties around the duration of the restrictions will further hurt airline business. Photo: Ramesh Pathania/mint

Virus headwinds poised to clip aviation sector wings

  • Domestic traffic may decline from 140 mn in FY20 to around 80-90 mn in FY21: Capa
  • Falling demand would leave Indian carriers with 200-250 surplus planes over the next 6-12 months

NEW DELHI : India’s civil aviation sector will be battered by the coronavirus pandemic with sharp declines in both domestic and international passenger traffic, aviation consultancy Centre for Asia Pacific Aviation India Pvt. Ltd (Capa India) said on Monday.

Consumer sentiment jolted by the virus outbreak, government curbs on air travel, and uncertainty over when they would be relaxed will severely hit airlines and allied industries, Capa India said in a report titled COVID-19 & the State of the Indian Aviation Industry.

Domestic air passenger traffic is expected to drop from an estimated 140 million in FY20 to around 80-90 million in FY21. International traffic is expected to almost halve from around 70 million in FY20 to 35-40 million in FY21, Capa India said in the report.

Falling demand would leave Indian carriers with 200-250 surplus planes over the next 6-12 months, the consultancy said.

“Indian carriers will require a domestic fleet of around 300-325 aircraft from October-2020 onwards, and an international fleet of 100-125 aircraft," the report said.

“The total fleet size of 400-450 aircraft would still mean that the current fleet of 650 represents a surplus of 200-250 aircraft for a period of 6-12 months," it said, adding that the projections assume that travel restrictions are mostly lifted by the end of the June quarter.

India’s aviation industry is expected to post losses of $3-3.6 billion in the June quarter because of covid-19, with airlines sharing the bulk of the hit, Capa India had said in a report last week.

The industry has, therefore, urged the government to offer financial relief, including fund infusion into airlines and airports.

The aviation industry needs an urgent bailout from the government, Ficci Aviation Committee chairman Anand Stanley said in a letter to civil aviation minister Hardeep Singh Puri last week.

The industry body has sought tax relief, deferment of payment of goods and services tax (GST) for airlines, bringing jet fuel under GST, reduction in airport charges and overflight fees, a temporary cut in excise duty on jet fuel, as well as other financial aid.

Several governments, including India, have restricted the entry of foreigners as a precautionary measure to contain the pandemic.

As part of those efforts, Prime Minister Narendra Modi on 24 March announced a 21-day nationwide lockdown. All domestic flights have been banned during the period of the lockdown until 14 April.

“...Restrictions are unlikely to be lifted in totality overnight. Instead, this process is expected to occur in a staggered manner and may not follow a straight line, particularly when it comes to international travel," Capa India said in its report.

“In addition, it is as yet unknown whether there will be additional operational considerations to be taken into account when services resume e.g. passenger concerns or even regulatory provisions related to social distancing at the airport and onboard; increased turnaround times to enable thorough cabin cleansing after each flight; limitations on inflight service; airport health checks as well as changes to security screening and immigration procedures, which may lengthen processing time," it added.

Aviation minister Puri had on Sunday tweetedthat a decision to resume domestic and international passenger flights from 15 April is yet to be taken.

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