After two month suspension of flights in the country on account of COVID-19 crisis, as announced by the Civil Aviation minister, Hardeep Singh Puri the domestic flights in the country resumed operations in a calibrated manner from May 25, 2020.
Before the suspension of all commercial flight operations on March 25, 2020, the aviation industry had been supporting around 6.2 million people and contributing around $72 billion to India’s GDP. Since then, hundreds of aircrafts of different Indian airline carriers have been grounded across the country.
India, currently, has five major airlines including national carrier Air India, IndiGo, Spicejet, Vistara and GoAir. These are now struggling to survive the ongoing pandemic. They are not only losing money every day, airports in India and around the world are also losing financially big every day. Air India, since lockdown was daily losing an estimated Rs 30-35 Crore.
Low on cash reserves
For some Indian carriers, cash reserves continue to deplete. Low revenue generation doesn’t mean they don’t have to maintain their aircrafts and pay salaries to their thousands of employees. According to data published by StockTalk, the airlines having very low cash reserves are likely to find it really hard to survive if the crisis persists longer.
Recently, airlines have announced salary cut for most of their employees.
This also poses a huge question on the job prospects the airlines’ employees. Their job security is at risk and the airlines may have to announce layoffs any time. The main fear for anyone, whether he is working in aviation industry or the government is that, any airline should not go bankrupt at this time, which may further increase unemployment in the country.
According to the data by StockTalk, airlines like IndiGo have large cash reserves and they can easily survive for at least for several months.
State-owned carrier, Air India has been getting financial support from the government. Due to this assured support, the airline has been able to survive and will still fly in future.
While most of the aircrafts of these airlines were grounded some helped government in transporting cargo from outside and within the country. SpiceXpress, the cargo airline of SpiceJet helped a lot in this.
As lockdown was imposed at a very short notice, it left thousands of the Indian nationals stranded across the globe and same was the case of foreign nationals in India.
Indian government has recently started Vande Bharat Mission to bring back its citizens from around the globe. It’s also the biggest such mission any country has ever executed. Air India and Air India Express are operating special Vande Bharat Mission flights.
Apart from the airlines, airports are also suffering big losses. With very less flights operating, airports are not able to get the passenger fees and taxes, etc, they used to get before the lockdown. While most of the airports are operating at very less capacity, many countries are also operating repatriation flights from some airports for their citizens.
Will air travel and industry be same in future?
When airlines will fully start operating commercial flights, the air travel demand will not be the same as before.
According to many aviation consultancy firms, airlines will take up to 2 years to see air travel demand at pre-coronavirus levels, which is not good for them. Before the pandemic, the profit margins of airlines were thin even when they operated at full capacity and now whenever they will be allowed to operate commercial flights like before lockdown, they will not be able to fill up there planes, which means losses.
Many big airlines like FlyBe, Europe’s largest regional airline got bankrupt due to their financial trouble which was deepened due to this deadly virus. Air Mauritius, Virgin Australia went to voluntarily administration because of Coronavirus.
Many more airlines are in financial trouble now and millions of jobs in aviation and tourism industry are now at stake. British Airways recently announced that they would lay off 12,000 employees, and in the case of Air Canada it is about 20,000 employees. Many other airlines are expected to follow the same to reduce costs.
According to IATA, revenue for 2020 is set to decline by $11.22 billion for the Indian airlines compared to the previous year. With so much loss, the Indian aviation industry will not look the same as before. Not only the Indian, global aviation industry is set for the same fate. According to IATA, the world over airlines may lose about $252 billion.
So far, no Indian carrier has announced any job cuts but it remains to be seen how long they can continue to do. If they continue to lose on travelers count, they are likely to face survival problems.
Airline business is one of the most difficult businesses in the world. It takes years to recover the cost of an aircraft. The airlines will struggle to survive. To what extent they succeed remains to be see. Let’s hope the best for their future.
About author: Ravreet Singh is a 15-year-old blogger who has a great interest in aviation. His main focus on aviation is connectivity of Amritsar, Punjab with rest of the world. He is the youngest team member of FlyAmritsar Initiative, a public campaign for more direct flights to and from Amritsar.Disclaimer: Opinion/facts in this article are author's own and famepunjabi.in does not assume any responsibility or liability for the same.