INSUBCONTINENT EXCLUSIVE:
The aviation industry achieved a load factor of just 55 per cent in first quarter of this financial year.The demand scenario in the Indian
aviation sector is likely to remain very subdued until at least the end of second quarter of financial year 2021, with no certainty of
revival in the second half, advisory firm CAPA India (Centre for Asia Pacific Aviation-India) said in its June Report, as the daily
acceleration in Covid-19 cases across the country continues to weaken consumer confidence
Traffic between metros has witnessed a more significant impact as these have been most affected by coronavirus, the report highlighted.In
its report released on July 3, 2020, CAPA India said that since the resumption of domestic operations on May 25, 2020, demand has been
The industry has achieved a load factor of just around 55 per cent in the first quarter of the ongoing financial year, despite operating at
30 per cent of its usual capacity.The month of June saw around 70,000 daily passengers on an average, compared to nearly 400,000 daily
domestic airline passengers in the same month last year, amounting to a year-on-year decline of around 80 per cent.There was hope that
demand would pick up after the strict lockdown began to be eased in June
But the pent-up demand has proven to be elusive as different states differ in their quarantine requirements, and these are often
inconsistent and confusing.And with projections of domestic traffic declining to 55-70 million in FY2021, the airlines in India are likely
to have a surplus fleet of 200-250 aircraft over the next 6-12 months."The outlook remains soft
Recent traffic has mostly comprised of essential repositioning traffic, with passengers that were stuck in the wrong place when the lockdown
was announced, returning to their home base
Discretionary travel has been limited, as reflected in the fact that more than 90 percent of bookings have been for one-way travel, compared
with 40 per cent prior to Covid," the report added.The aviation sector is likely to shrink significantly in India as the Covid-19 pandemic
triggers consolidation in the beleaguered sector, the report suggests
"Consolidation is looking more likely and will result in a very significant change in the structure of the industry
India may be headed for a 2-3 airline market if timely recapitalisation does not happen," the report said
In such a scenario, IndiGo will have a domestic share greater than 70 per cent and the other surviving carrier/s will be relatively weak.The
re-capitalisation effort itself would be highly capital-intensive as $3.5 billion would be required to recapitalise the Indian aviation
sector, excluding IndiGo airlines, the report concluded.
