New Delhi: With no signs of a government financial assistance plan, India's now-grounded aviation sector lies perilously close to bankruptcy as a result of the COVID-19 pandemic.
Desperate to resume operations, all Indian carriers are ill-equipped to deal with the extension of the lockdown till May 3, which was announced on Tuesday. No Indian carrier is even in a position to refund passengers who had booked flights scheduled to operate had the lockdown ended, as originally planned, on Tuesday, April 14.
Instead, SpiceJet, Vistara, IndiGo and GoAir have told passengers that their bookings for travel upto May 3 were cancelled and that their entire amount will be secure in a "credit-shell" which can be used to re-book travel later in the year or early next year.
There is still no clarity, however, if a few of these airlines will survive the next few months without a massive government bailout of the sector, details of which have not been announced.
According to the Centre for Asia Pacific Aviation (CAPA) which closely monitors civil aviation in the country, ''Most Indian airlines have not structured their business models to be able to withstand even regular shocks, such as elevated fuel prices or economic downturns, let alone once-in-a-century events.''
The writing appears to be on the wall. ''In the event of a 3-month shutdown, the two listed carriers alone - IndiGo and SpiceJet - could report combined losses of USD1.25-1.50 billion across 4QFY2020 and 1QFY2021. IndiGo's hitherto enviable free cash reserves may almost be wiped out by the end of 2QFY2021. Smaller carriers may exit,'' says CAPA in its report titled "Projecting the potential financial impact of COVID 19 on Indian Aviation".
15/04/20 Vishnu Som/NDTV
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Desperate to resume operations, all Indian carriers are ill-equipped to deal with the extension of the lockdown till May 3, which was announced on Tuesday. No Indian carrier is even in a position to refund passengers who had booked flights scheduled to operate had the lockdown ended, as originally planned, on Tuesday, April 14.
Instead, SpiceJet, Vistara, IndiGo and GoAir have told passengers that their bookings for travel upto May 3 were cancelled and that their entire amount will be secure in a "credit-shell" which can be used to re-book travel later in the year or early next year.
There is still no clarity, however, if a few of these airlines will survive the next few months without a massive government bailout of the sector, details of which have not been announced.
According to the Centre for Asia Pacific Aviation (CAPA) which closely monitors civil aviation in the country, ''Most Indian airlines have not structured their business models to be able to withstand even regular shocks, such as elevated fuel prices or economic downturns, let alone once-in-a-century events.''
The writing appears to be on the wall. ''In the event of a 3-month shutdown, the two listed carriers alone - IndiGo and SpiceJet - could report combined losses of USD1.25-1.50 billion across 4QFY2020 and 1QFY2021. IndiGo's hitherto enviable free cash reserves may almost be wiped out by the end of 2QFY2021. Smaller carriers may exit,'' says CAPA in its report titled "Projecting the potential financial impact of COVID 19 on Indian Aviation".
15/04/20 Vishnu Som/NDTV
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