Aviation consultancy firm Centre for Asia Pacific Aviation has warned that India’s civil aviation industry is at breaking point due to massive losses because of flight restrictions during the Covid-19 outbreak and this could take a toll on the country’s air connectivity.
On March 25, the Indian government imposed a ban on flights to curb the spread of Covid-19 and only allowed the resumption of flights two months later. Once flights resumed on May 25, airlines were allowed to operate only one-third of their scheduled summer flights, and that was later raised to 45%, but the airlines are still operating below 33% due to low patronage.
Passenger loads are still between 55% and 60%. In addition, the abrupt lockdown rule changes implemented by various state governments have impacted schedules, leading to frequent flight cancellations.
India’s top domestic airline IndiGo and prominent carrier SpiceJet have posted losses for the April-June quarter against profits in the same period one year ago. The consultancy observed that IndiGo’s losses were consistent with its earlier projection of a consolidated industry loss of US$1.50 billion to $1.75 billion.
It sees the second quarter to be a washout due to poor demand and the industry is at a breaking point.
It added that most airlines in India do not have the holding power to survive and multiple airline failures could set back air connectivity in India by 3-5 years.
All Indian airlines have either announced layoffs, pay cuts or furloughed employees. IndiGo plans to cut 10% of its staff as it sees no signs of an early revival of business.
Other airlines have also resorted to similar cost-cutting measures – Tata’s two aviation joint ventures, Vistara and AirAsia India, have announced pay cuts and reduced allowances for its employees.
GoAir has given leave without pay to 90% of its staff and SpiceJet has also cut domestic and international layover allowances for its pilots. State-owned airline Air India has also decided to furlough almost 600 employees for a period ranging from six months to five years.
The country’s prominent airports are also seeing a sharp drop in traffic, which is impacting businesses on its premises. New Delhi’s Indira Gandhi International Airport, the busiest in the country, operated only 9,335 domestic flights in June this year as against 27,985 in the same month last year, a drop of nearly 67%, the New Indian Express reported.
In the case of Mumbai’s Chhatrapati Shivaji Maharaj International Airport, the second busiest, the fall is even steeper at 87%. It operated a mere 2,594 domestic flights in June, against 19,682 in the same month in 2019, while Chennai airport recorded a fall of more than 80%, Bangalore 74%, Hyderabad 71% and Kolkata 61%.
Earlier, rating agency CRISIL forecast that Indian airlines would face revenue losses of 1.3 trillion rupees ($17.39 billion) between fiscal 2020 and 2022. The International Air Transport Association said close to three million jobs in aviation and related industries could be lost in India this year because of the pandemic.