On account of the Covid-19 pandemic and the subsequent travel-related restrictions, India’s aviation sector is staring at a grim future. In its latest report, aviation consultancy firm CAPA India estimates that domestic and international passenger traffic is expected to nosedive between 38% and 45% at the end of fiscal year 2021, as compared to a year ago.
“From a point of complete suspension of travel, recovery is likely to be slow. Demand will be suppressed due to economic dislocation; slow or even negative GDP growth; broken supply chains; low consumer confidence; and concerns about lingering outbreaks of Covid-19, especially if travel insurance companies refuse to provide cover for associated medical expenses or travel disruption costs,” read the CAPA India report, which was made public on Monday.
Based on their internal assessments, domestic traffic is expected to decline from an estimated 140 million in FY20 to around 80 million-90 million in FY21. International traffic is expected to fall from approximately 70 million in FY20 to 35 million-40 million in FY21.
At present, global aviation activity has declined by 66.8% over the last month, while in India the decline has been dramatic with the government having suspended all scheduled domestic and international flights until April 15. “With the exception of a handful of cargo and repatriation charter flights, India’s skies are largely empty,” said CAPA India.
Consequently, the consultancy firm added, “The combination of Covid-19-related travel restrictions and an economic downturn is likely to result in 1QFY2021 being a virtual washout for the Indian industry.” Moreover, according to CAPA India, forward bookings for domestic travel in May, June, and July are currently down 80% year-on-year. “This will further impact the more vulnerable carriers that are dependent upon cash generated from advance sales.” Even if some of the vulnerable airlines were to survive, there could be 200 to 250 surplus aircraft among Indian carriers over the next 6-12 months.
“A gradual path towards normality could be expected during Q3 and Q4 [of FY21]. Indian carriers will require a domestic fleet of around 300-325 aircraft from Oct. 2020 onwards, and an international fleet of 100-125 aircraft,” read the CAPA India report. “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. This may even be optimistic.”
