Sunday, March 22, 2020

Rumours & fears grip aviation sector as coronavirus dampens operations

New Delhi: Two rumours gripped the aviation industry as the COVID virus revealed its full stranglehold over the sector earlier this week. One, the aviation industry in India has been speculating on which would be the next airline to down shutters. This question has been a topic of much debate for a long time now — ever since Jet Airways became history. Many in the sector argue that there will be at best three to four players in the sector over the long term and that the weaker airlines will be weeded out sooner or later.

The epidemic has brought home that reality with a bang. Even CAPA’s Chief Executive Officer (CEO) Kapil Kaul, usually an industry cheerleader who always errs on the positive side of caution, seemed pessimistic. “If this continues for another two weeks with the same severity, a shutdown of certain players cannot be ruled out,” he said.
Almost all the airlines are seeing a drop in loads, which is expected to intensify as the numbers for March come in. International operations have been suspended by almost all players. A senior official in IndiGo said that while loads had currently shown a dip of 12-15 per cent, the drop in bookings in the coming weeks was even sharper and therefore they expected a further dip in loads for April. But airports in India are equally stressed and claim they need support too.

On March 16, Mumbai-headquartered GoAir began to give everyone the jitters. The airline stopped all international operations, drastically reduced domestic flights, and asked employees to stay at home without pay. The contracts of 70-odd expat pilots, signed as recently as August last year, have been terminated and the pilots have been asked to return to their home countries with a promise that their “full and final settlement would be done in due course”. The airline asked its own employees to go on leave without pay, aiming to cut at least 35 per cent of its staff across departments and close to 50 per cent in support functions. A staggered salary cut of 20 per cent has been suggested for the remainder staff. GoAir has reduced its fleet from 54 to 38 and will be reducing further down to 20 aircraft. In an email response, the airline maintained that this was temporary and in response to the present crisis but that the airline expects to remain on track and add 12-15 aircraft every year to its fleet right up to 2025. In the airline’s case, sources maintained that it faced a double whammy as there was no senior management to handle the crisis.
22/03/20 Anjuli Bharrgava/Business Standard

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