The aviation sector in India is bracing itself for severe turbulence as the growing conflict in the Middle East, surging fuel prices, and a depreciating rupee create a perfect storm, even for some of the nation's biggest carriers like IndiGo, Air India and SpiceJet.
Speaking to NDTV Profit, Sanjay Lazar, aviation expert and CEO at Avialaz Consultants, has warned that there could be tough times ahead for the industry.
"Indian aviation is facing a triple whammy without question. We are seeing a revenue collapse because of the Middle East routes, and we are seeing a cost explosion because of the war, fuel, detours, and demand fragility. Because, you know, customers will worry about travelling," Lazar said.
This operational pressure does not bode well for passengers either, as it will translate into more expensive tickets, a dynamic exacerbated by the government's recent removal of airfare caps.
"Domestically, which is still 65-70% of the airlines' markets, you are going to see a minimum of 10 to 15% hike gradually, probably in April," Lazar predicted, warning that Aviation Turbine Fuel (ATF) costs could double in the coming month. "So we are looking at gloom and doom times for the next at least one or two quarters."
While market leaders IndiGo and Air India are expected to weather the storm due to strong financial backing, Lazar expressed deep concern for smaller players struggling to control their fixed costs amid plummeting international traffic.
"[T]he top two will have no problem because they are backed by very strong balance sheets, very strong owners... But it's SpiceJet that worries me," Lazar noted.
He emphasised the urgent need for state intervention to prevent corporate casualties.
"I think the government needs to look at supporting all these 4, 5, 6 airlines in the country during these next 6 months because it could mean throwing somebody off balance. We don't want one of the smaller airlines to stutter during this period," he concluded.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
