Aviation sector slump: Govt support needed to arrest downward spiral

India’s aviation players are staring at potential revenue forgone of Rs 1.2-1.4 trn across fiscals 2020 to 2022 as the Covid-19 pandemic has shrunk air travel to a speck. We expect domestic air passenger traffic to drop 55-60% on-year to 60-65 million passengers in fiscal 2021 (similar to fiscal 2014 numbers). Fares are expected to decline post end of the capping period (November 25, 2020 onwards), leading to a 60-65% fall in airline revenues. And despite the 35-40% decline expected in fuel costs, the hit to revenues will translate into operating losses for the current fiscal.