Thursday, April 08, 2021

How the second Covid-19 wave could mar the summer of recovery for airlines

New Delhi: Last Sunday as Prime Minister Narendra Modi was meeting top bureaucrats over rising Covid cases, chief executive of a private airline asked his head of operations to prepare for a sudden grounding of operations.

Just a month ago, the CEO had met investors and the talk revolved around a total recovery and bright future of Indian aviation. He’s back to plugging daily cash burn.

Within two weeks of many airlines deciding to roll back salary cuts encouraged by a steady increase in traffic flow, a second wave of coronavirus along with rules of compulsory RT-PCR test has hit forward bookings. The fears of last summer, when the pandemic had overturned all the wisdom of airline boardrooms, have returned to haunt the aviation industry.

According to an official in the Ministry of Civil Aviation, flight occupancy is down to 60 per cent from 70 per cent in the first week of March. Airline lobby group IATA estimates that low cost airlines need to fly at 80 per cent occupancy to be profitable.

“The rising number of cases has certainly deferred a recovery. But with increasing vaccination drive, I expect a total recovery in six to eight months,” said Directorate General of Civil Aviation (DGCA) head Arun Kumar.

With caution in the air, airlines are reviewing their plans on aircraft deliveries and in some cases deferring fresh induction of aircraft. “SpiceJet and AirAsia together were supposed to bring in eight new aircraft by the end of May. Those are in cold storage now as airlines are unsure on what demand will look like a month later,” a person in know said.

08/04/21 Arindam Majumder/Business Standard

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