Domestic air traffic is expected to drop to 80-90 million passengers in the current fiscal and delivery of more than 200 planes to Indian carriers are likely to be deferred by up to two years, according to a report.
"The combination of COVID-related travel restrictions and an economic downturn is likely to result in 1Q FY2021 being a virtual washout for the Indian industry.
"The second quarter is historically the weakest period for demand and hence airlines are only likely to limp back into recovery," aviation consultancy CAPA India said on Monday.
As a result, CAPA said the majority of the fleet is likely to be surplus to requirement during the first half of the current financial year.
In its report titled 'COVID-19 & the State of Indian Aviation Industry,' the aviation consultancy forecast domestic traffic to decline to around 80-90 million this fiscal from an estimated 140 million in FY2020.
International traffic is expected to fall from approximately 70 million in the previous financial year to 35-40 million passengers or may be even less in the current fiscal.
While giving the forecast, CAPA India said it is initial estimate and would be continually revised.
Domestic and international flights have been suspended till April 15 amid nationwide lockdown to curb spreading of coronavirus infections. A gradual path towards normalcy could be expected towards Q3 and Q4, CAPA India said.
According to the report, airlines that are offered concessions by lessors would need to take a strategic call on whether they require all of their aircraft.
The holding costs of maintaining a larger fleet may outweigh the concession available.
More than 200 aircraft -- scheduled for delivery over the next couple of years, including 56 MAX aircraft -- are likely to be deferred by 1-2 years, it said.
"Starting from the end of April-2020, Indian carriers are initially expected to seek to return up to 100 aircraft to lessors, especially older equipment and those that may be closer to the expiry of their terms.
"The number of returned aircraft will continue to increase significantly up until September-2020, possibly reaching 200-250, or even higher," the report said.
Since aircraft lessors would have limited customers to whom they can remarket returned aircraft, they may be willing to negotiate temporary rental holidays, CAPA India said.
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