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Aviation Sector Losses in 5 Year and Might Get Affected by Pandemic

The coronavirus pandemic and nationwide lockdown that was imposed at some juncture have clearly impacted many sectors including the educational, agricultural, business and industrial sectors, etc. The aviation sector is also, one of them which has been clearly impacted by the COVID 19 crisis. Domestic flights have since resumed services in India from 25 May 2020 with heightened safety measures and restrictions such as social distancing, respiratory hygiene, and regular disinfection of aircraft and airports.

According to the International Air Transport Association, airlines globally can lose in passenger revenues of up to $113 billion due to this crisis. Talking about the airfares it has been dropped by 30% in bookings due to the pandemic. Domestic traffic growth is also gradually being affected by domestic travelers postponing or canceling their travel plans.
Some companies have reported a more than 30 percent drop in domestic travel this summer compared with last year.

According to the ICICI Securities estimation, both IndiGo and SpiceJet may report losses worth Rs 5,494 crore and Rs 1,412 crore, during the shutdown in business activity. ICICI securities also, pointed out that if the situation will normalize the operation will lead to lower losses and will make profits.

HIGHLIGHTS

  • According to a response in Lok Sabha at the time of the last session  (in March 2020), many of the airlines, except for AI Express, Go Air, and Blue Dart  (a cargo carrier) reported operating loss in the financial year 2018-19.
  • Even the IndiGo, SpiceJet and the state-owned Air India have all reported losses in 2018-19.
  • Air India Vistara and Air Asia have suffered the maximum loss of Rs. 4,685crores, Rs. 900 crores, loss Rs. 703 crores respectively. Indigo and SpiceJet have recorded a loss of Rs. 490 crores and Rs. 266 crores.
  • A state-owned, AI Express has recorded the highest profit of Rs. 433 crores in 2018-19. But the situation might get worsen due to the negative impact of COVID in the aviation sector.
  • As per the reports it can be said that only 3 companies have marked the profits in the years 2014-15 and 2018-19. They are Blue Dart airlines, a private cargo airline, and AI Express a state-owned has reported profits in each of the last five years.
  • Indigo has also, seen a loss in 2018-19, for the first time in the last five years, and Spice Jet has reported a loss for the second time.
  • Air Asia, Alliance Air, and Vistara have been reporting losses consecutively for the fifth year. Jet Airways and Jet Lite have ceased operations in India since 2019 because of high debts.
  • Many flight companies have ceased the operations during the 5 years’ time they are Air Costa, Air Pegasus, and Quick Jet Cargo.

Where the losses are maximum?

State-owned Airlines have recorded twice the amount of losses compared to private Airlines. The state-owned companies recorded profits in only two years, 2015-16 and 2016-17 while the Private Airline companies recorded profits almost five times that of state-owned, in 2015-16, and twice the amount 2016-17.

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