Domestic aviation to lose ₹25,000 crore revenue due to COVID-19: Crisil

It will also result in toll revenue losses worth ₹3,700 crore for highway developers and toll operators

Aviation
However, the road and highways sector would rebound faster despite the sharp losses this quarter, said Crisil | Representational Image/iStock

The domestic aviation industry is expected to incur a revenue loss of ₹24,000 to ₹25,000 this fiscal due to the COVID-19 lockdown, which has stalled both land and air traffic in the country, said a Crisil report on Thursday (May 7).

Besides, the lockdown will also result in toll revenue losses worth ₹3,700 crore for highway developers and toll operators during this March-June, while the National Highways Authority of India (NHAI) will lose ₹2,200 crore in toll free, according to Crisil Research.

Airlines will be the worst-affected segment, contributing more than 70 per cent to the losses (around ₹17,000 crore), said Jagannarayan Padmanabhan, director and practice leader, transport and logistics, Crisil Infrastructure Advisory, during a webinar.

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Airport operators are likely to suffer losses worth ₹5,000-5,500 crore while airport retailers will see a hit of ₹1,700-1,800 crore, he noted. Crisil estimates indicate the Indian aviation industry will “crash-land this fiscal”, witnessing a revenue losses worth ₹24,000-25,000 crore.

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That would reverse the growth trend of around 11 per cent per annum that the industry has logged over the past 10 years, making it one of the most adversely-affected sectors of the economy, the agency said.

Projecting higher losses for the industry, if travel restrictions last longer in hubs such as Mumbai, Delhi, Chennai and Kolkata, Crisil said it expects the aviation sector to take at least six-eight quarters to reach pre-pandemic levels.

“These are preliminary estimates, and aggregate losses could increase if the lockdown is extended beyond the first quarter,” Padmanabhan said, adding that as and when operations resume, overall operational capacity will hover at 50-60 per cent for the rest of the fiscal.

Consequently, mergers and acquisitions of airlines, and relook at expansion plans of private and upcoming greenfield airports would be possibilities, he noted.

However, the road and highways sector would rebound faster despite the sharp losses this quarter, a report said. “On its part, the roads and highways sector will see developers/toll operators incurring toll revenue losses of ₹3,450-3,700 crore during March-June, the estimate suggests. The NHAI will lose ₹2,100-2,200 crore in toll over this period,” said Crisil Infrastructure Advisory.

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The agency said NHAI had planned to raise ₹80,000-85,000 crore through fiscal 2025 by monetising 6,000 km of operational public-funded toll roads. “This asset monetisation programme through toll-operate-transfer and infrastructure investment trusts will likely take a hit,” Crisil said.

In addition to the loss in toll revenue, stakeholders will suffer losses on account of accrued interest, increase in costs of under-construction projects, time overruns, and rise in disputes between private sector and the government authorities.

“Tolling operations resumed on April 20 and construction on select projects has also restarted. Going forward, the ramp-up in traffic, availability of labour and raw materials for construction, and expeditious dispute resolution will be the key monitorables.

“In addition, road authorities such as the NHAI will have to step up initiatives beyond conventional avenues such as development of way-side amenities and formation of special purpose vehicles/ joint ventures for both, financing and revenues,” said Akshay Purkayastha, director, transport and logistics, Crisil Infrastructure Advisory.

(With inputs from agencies)

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