Tough time ahead for Indian aviation sector: Report
The industry is likely to face various challenges like high fuel prices, currency depreciation, rising interest rates, high inflation, geo-political tensions and recessionary conditions in various countries.
Centre for Aviation (CAPA) today released India Mid-Year Outlook for FY2023 for the aviation sector. According to the report, the next 12 months are likely to be challenging for the Indian aviation sector.
The industry is likely to face various challenges like high fuel prices, currency depreciation, rising interest rates, high inflation, geo-political tensions & recessionary conditions in various countries. Threat of supply chain issues & labour shortage especially in the West are other challenges for the Indian aviation industry.
The cost environment for the industry is likely to remain hostile, which is likely to make the next 12 months really challenging for the Indian aviation industry. The airline losses are expected to be significantly higher than previous estimates, losses could exceed $2.5 billion.
Low Cost Carriers can face losses up to $1 billion. On the other hand, Full Scale Carriers can face losses over $1.5 billion.
CAPA also highlighted that with more than 75 grounded aircrafts, there can be more challenges for the industry in the future. At least 10-12 percent of the aircrafts have been grounded either for maintenance or engine related issues.
Future deliveries are also likely to be impacted by supply chain issues that are likely to continue in FY24. Delay in future deliveries could lead to liquidity issues for some carriers.
CAPA has also highlighted that Domestic traffic is expected to be near 130 million or marginally lower & domestic capacity is expected to similar to pre-COVID levels. International traffic is still expected to be around 55-60 million & international capacity is projected to be around 10 percent lower than pre-Covid levels.
First Published: Nov 1, 2022 6:40 PM IST
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