Gyaneshwar Dayal
Indian aviation is expected to incur $4 billion worth of losses in 2021 and it is not easy to even out the operational costs before 2023
The Covid-19 pandemic has clipped the wings of the aviation industry the world over. In India, the lockdown banning air travel has hit this industry the worst.As a ripple effect,the tour and travel and the hospitality industry have also been hit.
Downsizing has led to people in these industries losing their jobs and a lucky few are working on half, reducedor meagre salaries. International Civil Aviation Organization (ICAO) pegs the losses of the aviation industry at $370 billion. Air travel is down 60 percent. This has led to airlines shutting most of their operations. They continue to incur fixed costs without the grounded fleets not earning a dime. According to the Indian rating agency ICRA, domestic passenger traffic between May and September 2020 was only 11 million in comparison to 70 million in 2019.
An aviation expert, PS Nair, says Indian aviation is expected to incur $4 billion worth of losses in 2021.Nair says: “These losses are not easy to even out. A very careful and integrated approach is required to rejuvenate the aviation industry. Everything would depend upon the economic recovery of the country. But aviation stands a good chance, as it has no alternative. If you have to travel, you have to take a flight; virtual flight is not an option.”
India is the seventh-largest civil aviation market in the world. It is the third-largest aviation market in terms of domestic operations. The country has the potential to overtake the United Kingdom and become the world’s third-largest aviation market in terms of handling air passengers within the next five years.
The best minds in the aviation industry recently had a brainstorming session under the aegis of the Air Travellers Association (ATA).GS Bawa, General Secretary, ATA, feels that the recovery will take years, if not decades. The recovery is linked to Covid-19 vaccination programs and testing procedures worldwide. He feels operational costs would not breakeven before 2023.
PS Nair, the former CEO, Delhi Airport and founder-CEO of HIAL says that the industry has a good chance to bounce back as fundamentals of the country’s economy are still favourable. For a few years before the pandemic, the aviation sector of India had registered a steady growth and India had overtaken Japan to become the third-biggest domestic market. Private investors were showing interest in developing the country’s airports but Covid-19 struck and stalled everything.
Efforts are already on in the industry as well as in the government to make the turnaround possible.To encourage the development of the aviation industry, the government plans to invest up to $1.83 billion and develop airport infrastructure and aviation navigation services by 2026. The Culture and Tourism Minister Prahlad Patel is hopeful of early revival, saying the tourism and aviation industries will be back with a bang because the government is linking its vaccination program with the drive to revive the tourism sector. The government is also working on a uniform policy for travel and protocols for vaccinated travellers. The Minister recently launched the Confederation of Hospitality, Technology and Tourism Industry, an industry body of travel and hospitality tech players like Airbnb, EaseMyTrip, OYO, and Yatra. The idea is to help small operators in the tourism sector.
Nair, however, feels optimistic because the country aims to open 100 new airports by 2024 of which 30 projects are already in progress. Plans are on to have 200 more airports by 2040. The infrastructure boost coupled with a rise in demand should see the Indian aviation industry flying high. “The Government must support the industry. If you increase the airfares, the demand may further come down, if you don’t losses would mount,” says Bawa.
On its part, ATA has a few recommendations for helping out the aviation industry. It has asked the government to compensate airlines and airports to the extent of their operating losses and give them some tax relief. It wants a government package for maintaining operations in tier-2 and tier-3 cities. This will improve passenger confidence. The traffic will improve bringing sustainability to the sector.
Bawa has also asked the government to relax the travel restrictions for those who have been vaccinated. “Restrictions like the RTPCR tests and quarantineshould not be mandatory for the travellers with both jabs,” he says. The ATA has suggested that for inland travel, a pass with a fitness certificate can also be issued. ‘Yatra Setu’ on the lines of ‘Arogya Setu’ can be a good step in this direction.
(The writer is a columnist and a documentary film-maker. The views expressed are personal. )
