COVID-19 AND THE INDIAN AVIATION INDUSTRY: IMPACT, PREDICTIONS AND MORE
The covid-19 pandemic has affected various industries in different ways; few for the good and few for the worse. On the same note, the Indian aviation industry especially has taken a hit in the business due to the domestic and international ban on flying as a part of lockdown guidelines. As per India Times report, the aviation industry in 2020 has been defined as “the worst year in history for air travel demand” due to lockdown;
Following the lockdown losses, in 2020 the AGIFORS (Airline Group of the International Federation of Operations Research) held a virtual meet on the same issue where the panel included the representatives from Airbus, Boeing, the Massachusetts Institute of Technology (MIT), and 11 airlines from across the world: AeroMéxico, Air Canada, Air France–KLM, American, Cathay Pacific, Copa, Emirates, IndiGo, United, Qatar, and SAS. The meeting pinpointed a pain point that April 2020 saw the worst hit of all due to abrupt lockdown which made almost 98% of the aviation operations stop.
Furthermore, as per IATA (International Air Transport Association) reports, the demand dropped up to 48.8 percentile below the 2019 levels.
To adduce, IndiGo and SpiceJet report state that they have incurred losses over 3000 crores and 700 crores respectively; this is a contributory effect of the reduction in the capacity from 87 percentile to 71 percentile of 2019 levels in 2020 (As per Bloomberg Analysis).
It is predicted that when the airlines function normally, airlines in India could earn a profit up to 25 percentile only, and getting back to 2019 level of profits shall take considerable time.
As per 2021 Hindustan Times reports, currently, only 47 percentile of the overall UDAN routes are operational, in contrast to 102 in 2019 and 120 in 2020. Due to the less operational level, airlines are currently experiencing operational losses and are set to face fractured future developments as well. Furthermore, as per the ICRA ratings, the UDAN which is set to operate 100 airports would see a delay up to the year 2026.
The 2016 UDAN initiative of the MoCA (Ministry of Civil Aviation) to enhance regional connectivity are unserved and underserved up to 39 percentile as of May 2021.
In addition to the currently operational routes as of 2021 (357 routes, 52 unserved and underserved airports), 00 unserved and underserved airports are set to be operated by the year 2024.
Following the prediction that the domestic airlines would be financially hit in 2021, Indian Airlines is predicted to lose 210 Bn INR in 2021, 127 Bn INR in 2022, and is set to have debt increased up to 500 Bn INR in 2022.
To combat the losses occurred/ occurring due to lockdown in the Indian aviation industry, Union aviation minister Jyotiraditya Scindia has formed a panel to discuss the same;