New Delhi: More domestic airlines could show interest in Air India, the soon to be privatized state-run airline, aviation consulting firm Capa said in its outlook for 2018-19.
“Up to four Indian carriers could express interest—Jet Airways, IndiGo, SpiceJet and Vistara,” Capa said in a report released in Mumbai on Tuesday.
IndiGo has already shown interest in Air India privatization, while the Tata group, which runs Vistara, has said it too would like to see the terms. Singapore Airlines, Tata’s partner in Vistara, has also not ruled out interest.
Capa expects Air India’s domestic and international airline operations, including budget arm Air India Express, to be sold as a single entity and units such as aircraft maintenance, catering, ground handling and hospitality to be hived off. Real estate will be transferred to a special purpose vehicle and working capital debt will be restructured, according to Capa.
Separately, India’s air traffic is likely to cross 150 million passengers by next fiscal, Capa said in the same report. “Domestic traffic expected to grow by 18-20%, crossing 150 million annual passengers, with capacity growth closer to 25%,” it said. Domestic traffic will touch 125 million passengers by March 2018, and international traffic 65 million, it said. Growth could, however, be hampered because of capacity issues.
Capa expects the Indian airline industry to post a loss of $350-375 million in 2017-18. IndiGo, SpiceJet, GoAir and Jet Airways are likely to make profits while Air India, AirAsia India and Vistara are likely to make losses.
The airports sector could see an initial public offering (IPO) by the GMR Group which runs the Delhi and Hyderabad airports, apart from airports overseas, according to the Capa report.
“IPO by GMR is likely. Disinvestment of MIAL (GVK group-run Mumbai International Airport Ltd) cannot be ruled out after it won the concession for Navi Mumbai Airport. Both GVK and especially GMR likely to focus on international opportunities,” it said.
Capa expects IndiGo’s fleet size to reach over 230 by 2018-19 from 153 currently. IndiGo has 445 planes on order. Jet Airways’s fleet size is likely to touch 122 from the current 117. It has 86 planes on order.
SpiceJet’s fleet is likely to touch 69 from 53, with 200 planes on order. GoAir’s fleet is likely to touch 52 from 32 currently and it has 131 planes on order. Air India’s 148 fleet could also see additions of about 16 planes. Vistara is likely to have 22 planes from current 17. It has 3 planes on order.
The government’s UDAN regional connectivity scheme (RCS) is finally getting some traction, the report said.
“With commitments by IndiGo, SpiceJet, Jet Airways and Alliance—who have won over 50 routes—RCS is finally gaining traction,” it added, but cautioned that “RCS needs to be restructured to make it viable”.
The firm does not see any bilateral flying rights expansion until 2019 and “with foreign carriers constrained, international expansion will be led by Indian airlines”.
IndiGo and SpiceJet are likely to begin low-fare long haul flights from this winter or summer next year. IndiGo is expected to induct 7 A321s in 2018, with 30% higher capacity, to be deployed in Mumbai.
Capa says aviation safety regulator Directorate General of Civil Aviation (DGCA) is short of 700-800 staff relative to its responsibilities.
“The regulator is severely lacking in resources and skills,” it said, adding, “Organisation is unwilling to change and is increasingly ineffective. An independent CAA (Civil Aviation Authority) along the lines of the UK is required as soon as possible”.livemint