CAPA sees another low-flying year for Indian aviation

Despite the entry of new players in the Indian aviation field, it is likely to be yet another poor year for the industry, as carriers head for another year of huge loss in 2014-2015, according to a report by aviation consultancy firm Centre for Asia Pacific Aviation.

The combined annual loss of India's airlines is expected to reach $1.3-1.4 billion (Rs7,823 -8,425 crore) by the end of the financial year, according to the CAPA report.

Indian carriers registered $1.7 billion (Rs10,231 crore) losses in 2013-14. Accumulated losses since 2007-08 reached $10.6 billion (Rs63,791 crore) while debt and liabilities climbed to almost $16 billion (Rs96,256 crore).

The analysts said several established carriers were in precarious financial position, with average cash balances of less than three weeks of revenue.

"Airlines other than IndiGo will require $1.6 billion of funding this year just to sustain their business models. The prospects for further direct investment in airlines remains very uncertain in the current climate," it said.

Budget carrier IndiGo, India's only profitable airline, could place an order for a further 200-250 aircraft at the Farnborough Air Show in July and possibly conduct an IPO later in the year.

The CAPA report says IndiGo "will continue to outperform the market and remain the sector's leading bright spot, although very intense competition has significantly reduced its profitability."