India's aviation industry is likely to be on a two-year pause as a result of the unprecedented disruption due to the COVID-19 pandemic, AirAsia India Chief Executive Officer Sunil Bhaskaran said.
Speaking in CAPA India webinar on designing a sustainable roadmap for the revival of Indian aviation, Bhaskaran said that while there is no doubt about a strong demand outlook for the Indian market in the long run, the next few quarters are going to be challenging with less number of flights and weak load factors.
"All expansions are on hold. We are struggling to keep up to whatever capacity we have. Unfortunately, aviation industry is a contract between a lessor and a lessee, so strongly in favour of lessor that even if we would like to, we could not return the aircraft or the cost of it would be so high that it would not be worthwhile. As I see today, it has to come with the confidence of customers which will come either with a cure or a vaccine in place. I don't see that coming back in 18-24 months. So I think it is a pause for Indian aviation for two years. But we will surely get back to the same growth path after that," Bhaskaran said.
The budget carrier is currently operating with 20 percent of its total capacity and witnessing an average of 50 percent load factor since it resumed operations from May 25. So far, the quarantine rules of states are playing the biggest role in driving demand such as those making mandatory institutional quarantine are seeing less demand. There is also demand from a large number of migrant workers who want to return to their destinations, primarily to the eastern part of the country.
Bhaskaran said that the airline is glad that it is finally flying after being grounded for two months but admitted that there was a lot of chaos and confusion on May 25 due to the last minute clarity on quarantine rules by several states. In fact, mandatory institutional quarantine for arriving passengers in a state like Karnataka is leading to abysmal load factor on incoming flights to Bengaluru while load factors coming out of the city are "good".
30/05/20 Anu Sharma/CNBC TV18
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Speaking in CAPA India webinar on designing a sustainable roadmap for the revival of Indian aviation, Bhaskaran said that while there is no doubt about a strong demand outlook for the Indian market in the long run, the next few quarters are going to be challenging with less number of flights and weak load factors.
"All expansions are on hold. We are struggling to keep up to whatever capacity we have. Unfortunately, aviation industry is a contract between a lessor and a lessee, so strongly in favour of lessor that even if we would like to, we could not return the aircraft or the cost of it would be so high that it would not be worthwhile. As I see today, it has to come with the confidence of customers which will come either with a cure or a vaccine in place. I don't see that coming back in 18-24 months. So I think it is a pause for Indian aviation for two years. But we will surely get back to the same growth path after that," Bhaskaran said.
The budget carrier is currently operating with 20 percent of its total capacity and witnessing an average of 50 percent load factor since it resumed operations from May 25. So far, the quarantine rules of states are playing the biggest role in driving demand such as those making mandatory institutional quarantine are seeing less demand. There is also demand from a large number of migrant workers who want to return to their destinations, primarily to the eastern part of the country.
Bhaskaran said that the airline is glad that it is finally flying after being grounded for two months but admitted that there was a lot of chaos and confusion on May 25 due to the last minute clarity on quarantine rules by several states. In fact, mandatory institutional quarantine for arriving passengers in a state like Karnataka is leading to abysmal load factor on incoming flights to Bengaluru while load factors coming out of the city are "good".
30/05/20 Anu Sharma/CNBC TV18
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