EBM News
EBM News

Aviation, auto and hospitality sectors badly hit with coronavirus lockdown

NEW DELHI:  India’s 21-day lockdown to control the coronavirus pandemic is going to have a huge impact on sectors that have already been reeling under an economic slowdown and unfriendly regulatory norms. Initial forecast show that auto industry is likely to lose over Rs 50,000 crore, while aviation industry is expected report losses in billions, in the coming quarters.

Kotak Institutional Equities said in a note that India’s private airlines can incur Rs 5800-6500 crore losses in Q4FY20-Q1FY21 combined, as they grapple with severe curtailment of operations.

Air India is expected to incur losses to the tune of Rs 30-35 crore per day following the suspension of operations, reports said. CARE Ratings noted, “Going forward, there seems to be turbulence and stormy clouds for the Indian aviation industry. Passenger growth of airlines is to fall sharply and see a negative 20-25 per cent growth in FY21.”

The hospitality industry is also bracing for a long-term impact. “We have already seen cancellations for all the bookings starting in March 2020, since most of the flights and transport came to a standstill… Specific efforts are also being made to negotiate to shift the bookings for a future date(s),” said, Nitin Mittal, co-founder and CEO, Hotel N Apartment. ICRA has revised the outlook on the Indian hospitality sector from stable to negative.

Production in auto sector, which has been facing a prolonged slowdown, has completely stopped. The lockdown is likely to bring around Rs 50,000 production loss to the industry. “Each day of plant closure of auto OEMs and components will lead to loss of more than Rs 2,300 crore in turnover,” SIAM president Rajan Wadhera said.