Risk of collapse for India’s aviation sector

According to a report by Cape India, second wave of Covid-19 can lead to fall down of domestic aviation industry. According to the report titled ‘Key Trends in Indian Aviation in FY2022: Impact of Second Wave’, the consolidations of companies in the sector is also expected to be speed up. 

“Most Indian airlines were already very vulnerable prior to the outbreak, with weak balance sheets and poor liquidity. Covid inflicted massive losses and led to an increasing debt burden on carriers that were structurally ill-equipped to absorb this impact,” the report said. Indian carriers under recovered the cost by US$ 70 per flyer in FY 21, indicating the extent of problems for the sector.

According to a report by ICICI securities, average number of daily flyers fell to 126,000 for the week ended 1 May, from 152,000 for the week ended 24 April, and to 193,000 in the week ended 17 April. The average passenger load factor (PLF) was at 50% during the week ending on 1 May. The industry is expected to report losses in FY22 as well, similarly to the previous year as the second wave disrupts its activities along with the risk of third wave.