Crisil Research in its latest report has said that Indian airlines are staring at a massive revenue loss of Rs 1.1-1.3 lakh crore over three financial years, including the current fiscal (FY21), due to the coronavirus pandemic which has led to visa and travel restrictions, thereby severely affecting aviation industry across the world. It said airlines are unlikely to recover this loss as growth is not expected to return to pre-pandemic levels of double-digit increase at least in the medium term.
The report said one would have assumed that the expected plunge in crude oil prices to $38-42 per barrel in fiscal 2021 compared with $64-66 per barrel in fiscal 2020 would have helped airline companies to an extent on the margin front as it forms a sizeable 30-45 percent of an airline's cost base. However, it said because of the outsized impact of the demand destruction, airlines are curtailing capacity deployment, thereby restricting opportunities to accrue the benefit of low crude oil prices.
According to the report, airlines are projected to post losses at Ebitdar as well as Ebitda levels in fiscal 2021 as fixed costs, such as lease rentals, employee expenses and maintenance tasks, had to be met even when the airplanes were grounded. It also said curtailed mobility of people due to the COVID-19 pandemic and related restrictions will shrink domestic air passenger traffic by 40-45 per cent and international traffic by 60-65 per cent, respectively, this fiscal. It added that with the COVID-19 pandemic still raging in much of the world, a revival to pre-pandemic levels appears unlikely even next fiscal.
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