The Indian government’s plans to offload Air India may be ambitious if analysis of the current outlook by market expert Satyendra Pandey, previously, head of Strategy for GoAir is correct. He says the Indian aviation sector may well be at an “inflection point”, with domestic air travel now back to 2006 levels and rebounding very slowly.
Against this negative outlook for the aviation sector is an even more parlous one for India’s attempts to deal with COVID 19 itself according to Pandey with the country about to reach 2.6 million cases of the disease and on course to have one of the highest infections rates globally by end of 2020.
Earlier this year Go Air’s chief executive Cornelis Vrieswijk quit within nine months of taking over the job and the third CEO to exit the business in four years. This is one of a number of management moves in the country’s LCC sector and Pandey say that indicate trouble.
Pandey didn’t name specific companies, but said the outlook was such that some Indian airlines are “teetering at the edge of insolvency”, with increasing liabilities and anemic cashflow and he warns that government intervention in the market is needed.
“Airlines are attempting to use haphazard financial structures bordering on legal viability, which is indicative of being in a precarious position,” says Pandey. “The government has categorically stated that airline owners need to put in additional equity and there is an eeerie repeat of earlier failures due to promoter reliance and reluctance being played out.”