Abstract
The Indian aviation sector over the recent years has shown a significant growth prospects on various parameters like passenger traffic, freight traffic, aircraft movements and number of airports, among others. But ironically the financial performance of most of the air carrier individually is not at all impressive. Every five years one airline in India is being grounded, latest being Jet Airways which had to suspend its operations in April 2019 due to severe financial crunch. The primary aim of this paper is to assess the current financial health of different Indian airline companies. This study uses four different models i.e. Altman Modified Z” Score Model, Pilarski Model, Fuzzy Logic Model and Kroeze Model to test the existence of financial distress and simultaneously aims to assess the applicability of these models on the Indian aviation sector. The models have been applied on four airline companies. Models indicate the existence of severe financial distress in three out of four chosen airlines and also indicate their suitability to be applied to the sector. The study contributes to the existing literature on Indian aviation by attempting to indicate the suitability of studied models for indicating financial distress which can lead to potential bankruptcy.
Highlights
The study contributes to the existing literature on Indian aviation by attempting to indicate the suitability of studied models for indicating financial distress which can lead to potential bankruptcy
The second part attempts to relate the results derived from the application of different models on select air carriers with the prevailing situation to assess the applicability of these models in Indian context
It can be observed that except Indigo, all other airlines are showing a Z" score less than 1.10. It indicates that these airlines i.e. Jet Airways, Air India and Spice Jet are under a high degree of financial stress
Summary
Air transportation has become a significant industry over time and it plays a key role in global tourism and supply chain functions. This industry generates substantial employment and contributes majorly to global economic growth (Fung, Law & Ng, 2006). It is susceptible to several intrinsic and extraneous risks These risks include economic boom and bust cycles, volatility in oil prices and exchange rates, infrastructure challenges, protectionism, wars and political upheavals, among others. This industry is vulnerable to various other events such as weather conditions, terrorist attack as well as natural disasters. All these issues lead to significant fluctuations in the profitability of air carrier or airline, the words used interchangeably in the paper
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
