The current situation of Indian aviation is grave and the next 6-12 months will be important in assessing the impact of COVID-19 on air travel, Mumbai International Airport CEO Rajeev Jain said.
Speaking in CAPA India webinar on designing a sustainable roadmap for the revival of Indian aviation, Jain said that no one understood the gravity of the situation in January and no one expected it to unfold the way it has.
"Everybody has to conserve cash right now and has to restart incurring capex after seeing what exactly unfolds in at least next 6 months to one year. That is very very important," Jain said.
As 80% costs of an airport are fixed in terms of interest burden, utility cost, maintenance expenses and employees cost, it is going to be a challenge to deal with low footfalls and there is not much scope to shift fixed cost into variable cost.
"Airports are lumpy investments, there is a lot of capex at the beginning. Hence, interest burden and repayment schedule are going to be a challenge unless something is done in a broader way. Moratorium may not be sufficient. 80% costs are fixed whether one passenger flies or more," Jain said.
Reiterating that the situation is unexpected and unprecedented, Jain pointed out that while India took the timely step of imposing lockdown, there is fear in lifting the lockdown.
The different quarantine rules and health protocols of various states have also led to a peculiar situation.
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, Jain said that no one understood the gravity of the situation in January and no one expected it to unfold the way it has.
"Everybody has to conserve cash right now and has to restart incurring capex after seeing what exactly unfolds in at least next 6 months to one year. That is very very important," Jain said.
As 80% costs of an airport are fixed in terms of interest burden, utility cost, maintenance expenses and employees cost, it is going to be a challenge to deal with low footfalls and there is not much scope to shift fixed cost into variable cost.
"Airports are lumpy investments, there is a lot of capex at the beginning. Hence, interest burden and repayment schedule are going to be a challenge unless something is done in a broader way. Moratorium may not be sufficient. 80% costs are fixed whether one passenger flies or more," Jain said.
Reiterating that the situation is unexpected and unprecedented, Jain pointed out that while India took the timely step of imposing lockdown, there is fear in lifting the lockdown.
The different quarantine rules and health protocols of various states have also led to a peculiar situation.
30/05/20 Anu Sharma/CNBC TV18
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