According to local rating agency ICRA Ltd, the domestic aviation industry is anticipated to incur a net loss of Rs 25,000-26,000 crore this fiscal, with high jet fuel prices and rate caps continuing to be a major concern for airlines’ profitability.
Domestic airlines, on the other hand, are expected to have a lesser net loss of Rs 14,000-16,000 crore in the coming fiscal year, thanks to a “notable rebound” in air passenger traffic and a lower debt level, according to ICRA.
During FY22-FY24, the ratings agency predicts that the industry would require extra investment in the range of Rs 20,000-22,000 crore.
Domestic air passenger traffic is expected to expand by 50-55 percent y-o-y in 2021-22, according to ICRA, thanks to the rapid pace of immunisation and regulatory authorities’ progressive relaxation of limitations.
This recovery, however, will be built on a significantly poorer foundation than in FY2021, according to the report. Given that a return to pre-COVID-19 levels is projected by FY2024, this will be much lower than pre-COVID-19 levels.
“With the onset of the second wave of the pandemic and the later emergence of the Omicron variant, the recovery in passenger traffic remained gradual in the current fiscal,” said Suprio Banerjee, vice-president and sector head of ICRA.
Further, elevated aviation turbine fuel (ATF) prices (which were 68 percent higher year-on-year basis in 11 months of the ongoing fiscal FY2022) and continued fare caps continue to pose a major challenge for the airlines’.
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