CAPA India warns most airlines have broken business case, government intervention urgent

: Airbus expects recovery of commercial aircraft market to pre-COVID levels between 2023-25

The government should provide a secured credit line to address the immediate cash crisis and promoters need to demonstrate commitment to save their business by guaranteeing asset collateral, Kaul said.

"Government should initiate structural reforms in all the critical areas like building institutional infrastructure, cost competitiveness, regulatory and policy competence," Kaul added.

Airlines will require more than $5 billion of recapitalisation just to survive the impact of the two covid waves, let alone achieve solvency. As a result, India's airlines are unlikely to return to profitability even in FY23, CAPA India said.

Also read: Air India extends offer of free changes in domestic flight bookings till June 30

Airports are critically placed, which may trigger strategic changes in ownership and they will no longer be able to rely on debt. The drivers of non-aero revenue are likely to experience structural change over the medium term, CAPA India said, adding that they are heading towards historic levels of over-capacity for the next 5 years or more and new policy responses are required for the sector post-covid.

The domestic air traffic has been severely hit since the second wave of COVID-19 and the daily domestic air passenger traffic has remained below the 2-lakh mark since April 13 and below the 1-lakh mark since May 5.

"Fewer people are travelling during this second wave. But with more people getting vaccinated, we are hopeful the domestic aviation figures will again pick up," aviation minister Hardeep Singh Puri wrote on Twitter on May 25.

Also read: Couple gets married mid-air in SpiceJet flight, DGCA starts probe

As per the latest data available, only 59,319 passengers flew on May 23 via 786 flights as against an average of nearly 400,000 passengers and 2900 flights on an average in the pre-COVID period.