The struggles of the Indian aviation industry are unlikely to ease in the coming few years, according to HSBC Global Research. The research house expects the entry of two new carriers, Akasa and Jet Airways 2.0, to weaken the health of the domestic airlines due to upcoming expected fare wars and excess supply in the Indian market.
In its report titled ‘Indian Aviation, 2022: A year of two halves’, HSBC Global Research said that while the aviation sector might see a recovery in demand in April-June 2022, optimism around the sector will be short-lived as new players plan to start operations from July.
“Amidst all these challenges, investors are concerned about the yield outlook…. we think the fare war could be an obvious outcome of excess supply in the market. On our calculation, the industry could add 80-85 aircraft this year which could increase the gap between demand and supply, adding pressure on the load factor and yield,” the research house said.
Furthermore, it expects InterGlobe Aviation-operated IndiGo and SpiceJet to report steep losses during the December quarter.