Domestic aviation industry has been severely impacted by the ongoing coronavirus pandemic and may need up to a $3.5 billion booster shot from the government.
Domestic aviation industry has been severely impacted by the ongoing coronavirus pandemic and may need up to a $3.5 billion booster shot from the government. While almost all domestic airlines are facing the heat of coronavirus lockdown, budget carrier IndiGo is an exception, a report by CAPA said on Friday. The government has allowed recommencement of domestic flight operations in the country but demand is likely to remain subdued until the September quarter and even after that, there is no certainty of revival in the second half, aviation consultancy firm CAPA said in the report. According to another report on domestic aviation industry, it is likely that the airline industry may be headed for a degrowth in FY21, a report by ICRA said on Friday.
This is not the first time that the Centre for Asia Pacific Aviation (CAPA) has said that airlines need funds to stay afloat. In fact, back in late April, the firm had said that Indian airlines, excluding IndiGo, will need to raise a minimum of $2.5 billion to survive the pandemic. While airlines have started operations and people have begun to travel, CAPA said the outlook remains “soft” as the recent traffic mostly comprised of those passengers who were stuck in the “wrong” place. “Our earlier funding estimate proved to be conservative. Revised requirements are now likely to be in the range of $3-3.5 billion,” CAPA said in the report.
As the pandemic hit the country, the government had imposed a nationwide lockdown on 24 March 2020 and had also brought flight operations to halt. As passenger traffic remained almost nil for two months, the revenues of the aviation industry dried up and losses mounted due to waiver and deferrals of lease rentals and supplementary leases, salary cuts and staff being sent on leave without pay. This year, traffic is expected to reach only around 2.5 million passengers as compared to 34 million for the same period last year.