An IndiGo Airlines A320 aircraft. Photo: AFP

With India locked down to contain the spread of Covid-19 and public transport, including commercial fights, halted, the country’s airlines are facing an unprecedented crisis. Their revenue sources have dried up, but they still have to maintain their aircraft and pay their employees.

IndiGo, the country’s largest airline, has reportedly sought more time – around six months – to make rental payments to aircraft lessors, Press Trust of India reported. The airline, which refused to comment, has a fleet of 257 planes – A320s, A320Neos, A321s and ATRs.

IndiGo reportedly follows the sale-and-lease-back model under which an aircraft is sold and then taken back on lease by the airline. But the current grounding of its fleet has upset its plans. The lease rentals and maintenance expenses, among others, are part of an airline’s fixed costs. These costs accumulate irrespective of whether flights are operating or not.

IndiGo CEO Ronojoy Dutta said last month that he would take a pay cut of 25% from April 1, while other executives above the senior vice president level would take cuts of 20%; vice presidents and pilots would take a 15% cut, while others including cabin crew would take 5%-10% reductions. However, it may be noted that this announcement was made before the Indian government announcing a countrywide lockdown.

Dutta recently said that once the lockdown is lifted and commercial passenger flights are permitted, IndiGo will deep-clean its aircraft more frequently, stop in-flight meal service for a brief period and fill only 50% of the seats in airport buses. He said the airline was formulating a new set of procedures to ensure the safety and health of its passenger and crew members and that they would be announced soon.

In the December quarter, the airline’s parent organization, InterGlobe Aviation Ltd, had posted a profit of 4.96 billion rupees. It was in the process of replacing all its faulty Pratt and Whitney engines powering its Airbus SE A320neo family of planes and adhere to the May-end deadline set by the civil aviation regulator, the Directorate General of Civil Aviation.

At the end of December, IndiGo’s total debt stood at 215.55 billion rupees and it had 200.68 billion rupees cash on hand. The net outgo towards aircraft and engine rental payments during the three months was 1.34 billion rupees.

Recently aviation consultancy firm Centre for Asia Pacific Aviation had estimated losses of US$ 3-3.6 billion for the Indian aviation industry in the first quarter of this fiscal year. This report came a day after the nationwide lockdown was implemented. It was to end on April 14, but was later extended till May 3.

Commercial flight services have been suspended since March 25 and only certain flight operations, including those for ferrying cargo, are allowed.

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