By Ravreet Singh, Published on May 24th, 2020 in Blog, News
By: Ravreet Singh
Indian aviation industry is one of the fastest growing in the World. Before the suspension of all commercial flight operations due to lockdown on March 25, 2020 it supported around 6.2 million people and contributed around $72 billion to India’s GDP. Since then hundreds of aircraft of different Indian airline carriers were grounded across the country. After almost 2 months of suspension of both international and domestic flights in the country, the Union Minister for Civil Aviation, Hardeep Singh Puri, recently announced that the domestic flights in the country will resume in a calibrated manner from 25 May 2020.
India currently has five major airline carriers including national carrier Air India, IndiGo, Spicejet, Vistara and GoAir. Due to COVID19 crisis, airlines are now struggling to survive this pandemic. They are not only losing money every day, airports in India and around the World are also losing crores in revenue every day. Air India, since lockdown was losing an estimated 30-35 crores rupees every day.
Low on Cash Reserves
For some Indian carriers, cash reserves are becoming empty day by day. Low revenue generating doesn’t mean they don’t have to maintain their aircrafts and pay salaries to their thousands of employees.
Recently airlines have announced salary cut for most of their employees. Some airlines pay crores in salaries per month to their employees like IndiGo, which pays around 400 crores per month.
According to data published by StockTalk, airlines like SpiceJet, GoAir are having very low cash reserves that it may be harder for them to survive for long due to crisis in the industry.
This is also creating a huge question on the future of airline employees. Their job security is at risk and these airlines may have to announce layoffs at 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 on that money for at least 6 months.
State owned carrier, Air India has been getting support from the government. Due to good financial support of government, Air India has been able to survive and may not go bankrupt. Air India will still fly in future. While most of the aircrafts of these airlines were grounded, some of these airlines helped government in transporting cargo from outside and within the country. SpiceXpress, the cargo airline of SpiceJet helped a lot in movement of cargo.
As lockdown was imposed in a very short notice, the lockdown also left thousands of Indian nationals, stranded across the globe and foreign nationals stranded in India.
Indian government has recently started a mission to repatriate back its citizens from around the globe, known as Vandhe Bharat Mission. It’s also the biggest repatriation mission any country has ever executed. Air India and Air India Express is operating special Vandhe Bharat Mission flights. With large fleet of 777, 787, 737, repatriation of citizens from many countries is being done.
Apart from airlines, airports are also taking many losses. With very less flights operating, airports are not able to get the passenger fees and taxes, etc, they used to get before lockdown. While most of the airports will be operating at very less capacity, many countries are also operating repatriation flights from some airports, to repatriate there citizens back to their countries.
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. Everything will be changed in industry. There will be new rules for airlines, passengers.
According to many aviation consultancies firms, airlines will take up to 2 years to see air travel demand at pre-coronavirus levels, which is not good for airlines. Before this pandemic, airlines were able to make very little profits when their planes were full and now whenever this flying ban will be over, airlines 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 by the virus. Mauritius air, Virgin Australia went to voluntarily administration because of Coronavirus. Many more airlines are in financial trouble now and millions of jobs in Aviation & Tourism Industry are now at stake. British Airways recently announced that they will lay off 12,000 employees, Air Canada announced that they will lay off 20,000 employees. Many other airlines may do the same to reduce costs.
According to IATA, Airlines revenue for 2020 is set to decline by $11.22 billion for Indian airlines compared to a year earlier. With this much of loss, the Indian aviation industry will not look the same as before. Not only Indian, whole aviation industry will be changed. According to IATA, the world airlines will lose about $252 billion. So far no Indian airline carrier has announced any job cuts but it remains to be seen how long they can continue to do. If this continues and with low number of air travelers, it is possible that Indian airlines may not able to survive this pandemic.
Airline business is one of the most difficult businesses in the world. It takes years to earn the initial cost of the aircraft. Airlines will do anything to survive, let’s hope the best for future.
Ravreet SinghAmritsar, Punjab India Email: email@example.com
Ravreet Singh is a young 15-year old blogger who has a great interest in aviation. His main focus on aviation is connectivity of Amritsar, Punjab with the World. He is the youngest team member of FlyAmritsar Initiative, a public campaign for more direct flights to/from Amritsar.
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