Indian Airlines Allowed to Operate at 80% of Pre-COVID Capacity

Dec. 4, 2020

Dec. 4—Airlines in India will be able to sell seats up to 80% of their pre-covid capacity on domestic flights, up from the existing 70%, in a further relaxation of restrictions in the sector hammered by the covid-19 pandemic.

Civil aviation minister Hardeep Singh Puri tweeted about the change on Thursday, offering some relief to airlines looking to fly more passengers during the Christmas-New Year period. "Domestic operations recommenced with 30K (30,000) passengers on 25 May & have now touched a high of 2.52 lakhs on 30 Nov 2020," Puri said in a social media post.

The Directorate General of Civil Aviation (DGCA) had on Thursday evening issued a circular to increase the cap on domestic flight capacity from 70% to 80% of pre-covid levels. A copy of the DGCA circular has been reviewed by Mint.

Meanwhile, credit rating agency Icra Ltd said in a report on Thursday that Indian airlines will post net losses of about INR21,000 crore in FY21 following a raft of travel restrictions and amid diminishing travel appetite due to rising covid cases. The airlines will require additional funding of INR37,000 crore over FY21 to FY23 to recover from losses and debt, it said, adding that it maintains a negative credit outlook on the airline industry.

The profitability of Indian airlines has been adversely impacted in FY21 due to lower revenues and high fixed costs, while passenger traffic continues to improve sequentially. Domestic airlines, which are mostly loss-making, reported net losses of INR12,700 crore in FY20.

The airline industry's debt is expected to rise to about INR50,000 crore, excluding lease liabilities, by FY22, Icra said in the report.

"The two listed airlines (IndiGo and SpiceJet) have together lost about INR31 crore per day during H1 FY21 (April-September)," said Kinjal Shah, vice president, Icra.

Shah added that daily cash burn for airlines reduced to INR26 crore during the September quarter due to improvement in domestic passenger traffic, and cost rationalization initiatives by the domestic airlines.

Airlines resumed domestic operations on 25 May, after being grounded for two months due to the lockdown.


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