Airlines caught in turbulence

Though the situation is grim for airlines and airport operators, the govt has done little to assuage their concerns

AuthorPublished: 15th Oct 2020  12:00 amUpdated: 14th Oct 2020  6:40 pm

Hit hard by the coronavirus pandemic that forced people to abort their travel plans, the aviation industry is looking at darker days ahead. The impact has been particularly disastrous for the Indian aviation sector, so much so that the country’s largest airport operator, state-run Airports Authority of India (AAI), has been forced to borrow Rs 1,500 crore for working capital requirements this year as it stares at a rare net loss. Though the situation is grim for airlines and airport operators, the government has done little to assuage the concerns of the industry. The aggregate revenue of Indian carriers came down 85% from Rs 25,517 crore in June quarter of last year to Rs 3,651 crore during April-June 2020. Air India’s revenue fell to Rs 1,531 crore from Rs 7,066 crore in the same quarter last year. The revenue of airport operators was only a fraction of last year, down by nearly 85% to just Rs 894 crore against Rs 5,745 crore earlier. The pandemic cost nearly 18,000 people their jobs between March and July. The lockdown reduced air traffic to a fraction of what it was prior to the pandemic. Regulatory restrictions on flight operations by domestic and international sectors have led to a severe curtailment of operations and sub-optimal aircraft utilisation. International traffic reduced by 87% from 93.45 lakh to 11.55 lakh during the same period. The International Air Transport Association (IATA) estimates that the global aviation industry is staring at a loss of $84.3 billion, with the financial viability of many airlines coming into question.

Though some international airlines have resumed operations in India and are part of the air travel arrangements that have been signed with countries like the UK, the US and France, these are only temporary bilateral arrangements aimed at restarting commercial passenger services. Given the alarming rise in the number of Covid-19 cases and deaths across the country, the aviation industry is far from being out of the woods. Even if air traffic increases in near future, paying the debts will be a challenge and airlines might have to increase fares, driving away passengers at a time when they are supposed to be lured to avail services. All airlines in India have taken cost-cutting measures such as lay-off, pay cuts and leave-without-pay in order to conserve cash. Domestic passenger flights have resumed since May 25 after a gap of two months with the airlines being allowed to operate only a maximum of 60% of their pre-Covid domestic flights. Airlines, airport operators, ground-handling agencies and tens of thousands of people employed in the sector have been under severe stress due to the restrictions on air travel being in place since March.

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