NEW DELHI: Hit by COVID-19 pandemic and steep rise in jet fuel prices, aviation industry’s losses can peak up to Rs 42,000 crore in two financial years.
According to credit ratings agency ICRA, the Indian aviation industry is expected to report a net loss of Rs 25,000-26,000 crore in FY2022 while the same may moderate to Rs 14,000-16,000 crore in FY2023. In FY21, Airlines in India (excluding SpiceJet) suffered cumulative losses of Rs 15,086.3 crore.
This estimate comes even as India’s largest carrier IndiGo and Gurgaon-based SpiceJet bounced back to profitability in the December Quarter.
However, the disruption caused by the omicron variant of coronavirus, especially in the month of January, is expected to weigh heavily on the airline in Q4FY22. The other factor that has become a big headache for the sector is the continuous rise in jet fuel prices.
On March 1, Aviation turbine fuel (ATF) prices were hiked by another 3.3% to a record high of Rs 93,530.66 per kilolitre in Delhi.
This is the fifth hike in jet fuel prices in CY 2022 and going by the current geo-political tensions, ATF prices, which account for 35-40% operational cost for an airline, may rise more in near future.
Suprio Banerjee, Vice President and Sector Head, ICRA Limited, says that elevated ATF prices (higher by 68% on Y-o-Y basis in 11M FY2022) and continued fare caps continue to pose a major challenge for the profitability of the airlines.
Rs 25,000-26,000 crore
The net loss Indian aviation industry is expected to report in FY2022 while it may moderate to Rs 14,000-16,000 crore in FY2023.
Rs 15,000 crore
In FY21, Airlines in India (excluding SpiceJet) suffered cumulative losses. Persistent fare caps continue to pose a challenge for the profitability of the airlines.