Press Release
May 07, 2020 | Mumbai
Aviation flies towards Rs 25,000 crore revenue loss,
which would spur structural changes
Roads and highways would rebound faster despite sharp losses this quarter
The extended lockdown to contain the Covid-19 pandemic, which has stalled traffic on the ground as in the air,
is expected to heap enormous losses on infrastructure industries in both sectors.
CRISIL’s estimates indicate that the aviation industry, for one, will crash-land this fiscal with revenue loss of Rs
24,000–25,000 crore. Airlines will be the worst-affected, contributing more than 70% of the losses, or ~Rs 17,000
crore, followed by airport operators with Rs 5,000-5,500 crore, and airport retailers (including retail, food and
beverages and duty-free) with Rs 1,700-1,800 crore.
That would reverse the trend growth of ~11% per annum the industry has logged over the past ten years, making
it one of the most adversely affected sectors of the economy.
What’s worse, the losses will climb if travel restrictions last longer in hubs such as Mumbai, Delhi, Chennai and
Kolkata. We expect the aviation sector will take at least 6-8 quarters to reach pre-pandemic levels.
Says Jagannarayan Padmanabhan, Director and Practice Leader, Transport & Logistics, CRISIL
Infrastructure Advisory, “These are preliminary estimates, and aggregate losses could increase if the
lockdown is extended beyond the first quarter. As and when operations resume, overall operational
capacity will hover at 50-60% for the rest of the fiscal. Consequently, mergers and acquisitions of airlines,
and relook at expansion plans of private and upcoming greenfield airports would be possibilities.”
On its part, the roads and highways sector will see developers/ toll operators incurring toll revenue losses of Rs
3,450-3,700 crore during March-June, the estimate suggests. The National Highways Authority of India (NHAI)
will lose Rs 2,100-2,200 crore in toll over this period.
In addition to the loss in toll revenue, stakeholders will suffer losses on account of accrued interest, increase in
costs of under-construction projects, time overruns, and a rise in disputes between the private sector and
government authorities.
Moreover, the NHAI had planned to raise Rs 80,000-85,000 crore through fiscal 2025 by monetising ~6,000 km
of operational public-funded toll roads. This asset monetisation programme through toll-operate-transfer and
infrastructure investment trusts will likely take a hit.
Says Akshay Purkayastha, Director, Transport & Logistics, CRISIL Infrastructure Advisory, “Tolling
operations resumed on April 20 and construction on select projects has also restarted. Going forward,
the ramp-up in traffic, availability of labour and raw materials for construction, and expeditious dispute
resolution will be the key monitorables. In addition, road authorities such as the NHAI will have to step
up initiatives beyond conventional avenues such as development of way-side amenities and formation
of special purpose vehicles/ joint ventures for both, financing and revenues.”
For further information,
Analytical contacts
Jagannarayan Padmanabhan Akshay Purkayastha
Director and Practice Leader - Transport & Logistics Director – Transport & Logistics
CRISIL Infrastructure Advisory CRISIL Infrastructure Advisory
B: +91 22 3342 3000 B: +91 124 672 2000
[email protected] [email protected]
Media contacts
Saman Khan Naireen Ahmed
Media Relations Media Relations
CRISIL Limited CRISIL Limited
D: +91 22 3342 3895 D: +91 22 3342 1818
M: +91 95940 60612 M: +91 9004084769
B: +91 22 3342 3000 B: +91 22 3342 3000
[email protected] [email protected]
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About CRISIL Infrastructure Advisory
CRISIL Infrastructure Advisory is a leading advisor to regulators and governments, multilateral agencies, investors, and large public and
private sector firms. We help shape public policy and enable infrastructure development. Our services span a wide array of infrastructure
development activities. Our work in the areas of policy formulation, regulation, design and implementation of public-private partnership (PPP)
frameworks and infrastructure financing mechanisms helps create a vibrant ecosystem for infrastructure development. Our services at the
project level include bid process management, valuations and due diligence to enable investment decisions. We are known for our core
values of independence and analytical rigour combined with deep domain expertise. Our teams have expertise across the complete range of
infrastructure sectors - urban development, energy, transport and logistics, natural resources, education, and healthcare. We have a rich
understanding of PPP and financing related issues. We operate in India and 22 other emerging economies in Asia, Africa, and the Middle
East. CRISIL Infrastructure Advisory is a division of CRISIL Risk and Infrastructure Solutions Limited, a wholly owned subsidiary of CRISIL
Limited.
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