India Finance News

737 Max grounding, Jet crisis may drag down passenger growth to 4%: Crisil

Non-revival of Jet Airways, coupled with grounding of the Boeing 737 Max planes, is expected to drag down domestic passenger growth to 3-4 per cent in 2019-20 as against 14 per cent in the previous financial year, rating agency CRISIL said on Tuesday.
The domestic traffic data in the April-September period, during which the passenger volume grew a mere 2 per cent, also reflects this estimate, rating agency said in its aviation outlook note.

On a calendar year basis, the domestic air traffic grew only 3.86 per cent in the January-November period of this year, way below an 18.60 per cent growth recorded in the January-December period of 2018.
“Crisil expects domestic air passenger traffic growth in India to slow to 3-4 per cent in fiscal 2020 from 14 per cent in fiscal 2019, considering the non-revival of Jet Airways and grounding of Boeing 737 Max aircraft,” Hetal Gandhi, director at Crisil Research, stated in the outlook note.
This was also reflected in the data for the first half of 2019-20 where domestic passenger traffic growth was a mere 2 per cent, she added.
Jet Airways, which is currently under insolvency proceedings, ceased operations in April after lenders refused further capital injection in the carrier amid a debt of Rs 8,500 crore.
Moreover, the global ban on Boeing 737 MAX aircraft following two deadly accidents dealt a blow to many airlines world over, including SpiceJet, which has chalked out its growth plan around these latest fuel-efficient single-aisle planes.
In March 2019, aviation regulators, including the DGCA, banned Boeing 737 MAX aircraft after two of these planes met with accidents within a span of five months, killing around 350 people, allegedly due to faulty software systems.
SpiceJet had to ground all its 13 737 MAX planes in the fleet in March.
Boeing has already announced to temporarily suspend these jets from next month as safety regulators delay the aircraft’s return to the skies.
Gandhi said Ebitdar (earnings before interest, tax, depreciation, amortisation and lease rentals) margins of the industry in the current financial year are expected to improve by at least 600 basis points compared with fiscal 2019 levels, led by firmer fares, soft crude oil prices and a cut in excise duty on aviation turbine fuel.

Source: Business Standard

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