Tuesday, December 6, 2022
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Aviation Sector: There is a possibility of loss of 150 to 170 billion rupees for the aviation sector in the current financial year.

Aviation Industry: The domestic airline industry may suffer a net loss of Rs 15,000-17,000 crore in the current financial year due to fall in rupee exchange rate and rise in aviation fuel (ATF) prices. Rating agency Icra said in the report that in the last financial year, the domestic aviation industry had a loss of about Rs 23,000 crore. According to the rating agency, the debt level for the industry is likely to be around Rs 1 lakh crore (including lease liabilities) by March 31, 2023.

Jet fuel or ATF prices have the biggest impact
The report said that the depreciation of the rupee against the US dollar and the hike in jet fuel or ATF prices have had the biggest impact on the cost structure of Indian airline companies. Aircraft fuel accounts for about 45 per cent of an airline’s operating cost, while 35 to 50 per cent of the airline’s operating expenses are driven by US dollars.

There is a possibility of loss of 150 to 170 billion rupees
According to Icra, in the financial year 2021-22, the number of domestic passengers has increased to 84.2 million with a strong growth of 57.7 percent on a yearly basis. ICRA Vice President and Region Head Supriyo Banerjee said, “Despite the expected improvement in the number of passengers, the domestic industry is expected to have a net loss of about 150 to 170 billion rupees in the financial year 2022-23.”

The effect of increased ATF price will be
“The reason for this deficit is the rise in the prices of aircraft fuel and the recent depreciation of the rupee against the US dollar. Both of these have a serious impact on the operating cost of the airlines,” he said.

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