India's Aviation Sector to Witness Declining Flights due to Low Air Travel Demand

New Delhi, April 7, 2020:

India's aviation sector may witness a fall in the flights following the low air travel demand amid coronavirus, said a latest report by Centre for Asia Pacific Aviation (CAPA).

According to the report by the aviation consultancy firm, nearly 40 percent of the combined fleet of Indian airlines may not fly in the next twelve months due to a low demand of air travel.

CAPA has projected that the demand for domestic air travel will decline 60 percent and international travel will drop to 50 percent, following which, the India's aviation sector may have to face the brunt of the subdued demand for air travel.

“Indian carriers will require a domestic fleet of around 300-325 aircraft from October-2020 onwards, and an international fleet of 100-125 aircraft," the report said.

“The total fleet size of 400-450 aircraft would still mean that the current fleet of 650 represents a surplus of 200-250 aircraft for a period of 6-12 months," it said.

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“...Restrictions are unlikely to be lifted in totality overnight. Instead, this process is expected to occur in a staggered manner and may not follow a straight line, particularly when it comes to international travel," CAPA India said in its report.

“In addition, it is as yet unknown whether there will be additional operational considerations to be taken into account when services resume e.g. passenger concerns or even regulatory provisions related to social distancing at the airport and onboard; increased turnaround times to enable thorough cabin cleansing after each flight; limitations on inflight service; airport health checks as well as changes to security screening and immigration procedures, which may lengthen processing time," said the CAPA report of India's aviation.

CAPA reports that for India to return to a pre-COVID operational fleet of 650 aircraft is likely to take up to 12 months from the time that restrictions are lifted, and this may be conservative. "It assumes that the 1QFY2021 (first quarter of the 2021 financial year) will be almost written-off, with traffic limping back during the weak second quarter, followed by a gradual trajectory towards normality during the second half of the financial year."

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It noted, "Projections are further complicated by the fact that restrictions are unlikely to be lifted in totality overnight. Instead, this process is expected to occur in a staggered manner and may not follow a straight line, particularly when it comes to international travel. For example, China, Hong Kong and Singapore have all re-imposed certain travel restrictions after an initial relaxation resulted in an acceleration of new cases, mostly imported by overseas arrivals."

CAPA's report says that in a market such as India has a very late booking profile. "On top of which, forward bookings for domestic travel in May, June and July are currently down 80% year-on-year, and will remain significantly constrained for at least the next 4-6 weeks. This will further impact the more vulnerable carriers that are dependent upon cash generated from advance sales," added the report.

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