TBM Staff - Mumbai The domestic aviation industry is expected to report a net loss of INR 25,000-26,000 crore this fiscal with elevated jet fuel prices and fare caps continuing to pose a major challenge for the airlines’ profitability, domestic rating agency ICRA said on Thursday. Domestic airlines, however, are likely to post a reduced net loss of INR 14,000-16,000 crore in the next financial year on the back of a “notable recovery” in air passenger traffic and lower level of debt, ICRA added.
The ratings agency also estimates that the industry will require additional funding in the range of INR 20,000-22,000 crore during FY22-FY24. ICRA said it expects domestic air passenger traffic to witness a strong y-o-y growth of 50-55 per cent in 2021-22 supported by the fast pace of vaccination and gradual relaxations in restrictions by the regulatory authorities. However, this recovery will be on a much lower base of FY21. Recovery to pre-Covid levels is not expected till FY24.
“Further, elevated aviation turbine fuel (ATF) prices, (which were 68 per cent higher year-on-year in 11 months of the ongoing fiscal) and continued fare caps continue to pose a major challenge for the profitability of the airlines,” said Suprio Banerjee, Vice-President and Sector Head of ICRA. Recovery in domestic air passenger traffic is expected to be supported by pent-up demand in the leisure travel segment and gradual recovery in business travel, ICRA said. The impact of the pandemic has been more profound on international travel compared to domestic travel, it added.
