I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.
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There are travel restrictions being put upon the people which is diminishing travel appetite due to the corona virus pandemic as people are being locked down in their homes and it is not allowed to move from one place to another unless there is some urgency. Thus the aviation industry is expected to undergo huge losses of about $3-3.6 billion in the June quarter as these airlines have been put through a lot of restrictions for the customers as reported on Wednesday by the aviation consultancy Capa India.
The losses incurred by the domestic carriers are about $1.75 billion next quarter, along with which concessionaires suffering loss of about $1.50 billion and $1.75 billion and airports along side them making the losses as stated by the reports of Capa India. There was a loss of about $80-90 million the ground handling industry had to suffer during the same period of time amid corona virus pandemic outbreak all around the globe.
There number are the estimates stated by the company Capa India for potential sectorial losses are in an assumption that all the international and domestic operations remain grounded till 30 June as stated by Capa India in the report titled ‘Projecting the potential financial impact of COVID-19 on Indian aviation’. The further operations or resuming of the services cannot be estimated as it totally depends upon how the virus conditions evolve in these 21 days of lockdown in the country.
The airlines business in India are built in such a way that most of them do not have a structured business models which will be capable of withstanding the small shocks which occur regularly like hike in the prices of fuel or any economic downturns which are normal and expected events that occur once in a century as stated by the reports when ask about the effects of corona virus on the airlines.
The reports states that several airlines globally are on the verge of grinding to a halt, if this lasts for too long, this conditions and state of affairs will increase the risks for the big players in the global airlines industry. Some of the airlines which are weaker financially are likely to quit the business because of the hug losses suffered by them due to the lockdown phase of 21 days and the government to put restriction on the travel of the people all over the globe.
Indian Airlines are not the ones prepared to withstand thee types of severe shocks they have been seeing from a last couple of weeks and still going without any prediction of how will the future hold these situations because of the corona virus fallout in the entire country. The virus will impact the entire aviation value chain which include various sectors such as the airport operators, and other airport concessionaires, ground handlers, the maintenance, duty free shops, retail, food and beverages, repair and overhaul industry, inflight catering companies as stated by Capa India in their reports. The impact of this pandemic will surely have adverse effects on the FY2021 and quite possibly well beyond as the entire sector is now in a crisis.