In India, single-aisle airplanes such as the 737 family will continue to drive growth in domestic and regional markets, e.g., short-haul flights from India to Middle East and Asia-Pacific regions. Indian operators will need 1,960 new single-aisle airplanes over the next 20 years
With fast receding Covid 19, the airlines industry is expected to gain traction and grow at a fast pace. Going forward, Asian carriers are likely to gain share globally led by carriers in China, South Asia and Southeast Asia. In India, single-aisle airplanes such as the 737 family will continue to drive growth in domestic and regional markets, e.g., short-haul flights from India to Middle East and Asia-Pacific regions. Indian operators will need 1,960 new single-aisle airplanes over the next 20 years. These are some of the major findings of a report, Airlines Industry: Prospects and Challenges, released by Infomerics Valuation and Rating Pvt Ltd., the SEBI-registered and RBI-accredited financial services credit rating company.
Mounting and volatile crude oil prices are seen in jet fuel price rising from ₹ 76062/KL from January ’22 to ₹ 112924/KL on 1 April ’22. In March 2022, crude oil price were (Indian Basket) $112.87/barrel ($/bbl) as against $94.07/barrel ($/bbl) in February ’22.
Factors aiding growth of air travel in future: With steady economic growth in India, the burgeoning middle class, the thrust on mobility and connectivity, the opening of new airports and the up-gradation of the existing airports, the pent-up desire for air travel and synchronized institutional support, including at the level of the Government of India, the airlines industry is likely to do well over the medium-term
At present, the Central Basic Excise Duty (BED) on ATF is 11 per cent, basic Custom Duty (BCD) is 5 per cent and Additional Custom Duty (ACD) is 11 per cent. [under the list of Non-GST goods]. Overall, ATF constitutes 45 per cent of the operating cost. Further, there are various state taxes and VAT. However, the Union and some states are acting on taxation and 12 additional states and UTs are in the process of bringing VAT and ATF rates to 1 to 5 per cent.
Airlines have been hit because of delayed fund infusion, stoppage and go-slow of flights, and post pandemic effects with rising outstanding across vendors and suppliers. There are also issues of legal battles, motivating employees and cargo business.
Leading players have modified business plans to reduce costs, enhance liquidity, customer preference, explore new revenue models, optimize networks. Going forward, this would strengthen their financial position over the medium-term and shore up the bottom-line of the airlines.
However, air travel is rising in terms of domestic and international passengers handled by Mumbai and Delhi Airports, industry-wide revenue passenger-kilometers (RPKs), aircraft movements of passengers and freight, etc. With fast receding Covid 19, the airlines industry is expected to gain traction and grow at a fast.
Factors aiding growth of air travel in future: With steady economic growth in India, the burgeoning middle class, the thrust on mobility and connectivity, the opening of new airports and the up-gradation of the existing airports, the pent-up desire for air travel and synchronized institutional support, including at the level of the Government of India, the airlines industry is likely to do well over the medium-term. Should there be a tax reduction in the case of ATF, this would provide a further impetus to the growth of the airlines industry.
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