NEW DELHI: Despite airlines showcasing their plans to safely resume services in the wake of Coronavirus outbreak, government of India felt it is too early to lift travel restrictions. Directorate General of Civil Aviation (DGCA) on Tuesday clarified that domestic and international flights will remain suspended till May 3.
The extended lockdown will add to sector's woes whose revenues have been hit due to halt in commercial flights across India and abroad. According to Kinjal Shah, Vice President at ICRA, industry will report a net loss of Rs. 75-90 crore per day.
"The Indian aviation industry is characterised by high fixed costs. ~35-42% of the airlines" expenses are fixed. Considering the operating expenses of the Indian aviation industry (aggregate of Air Asia India Limited, Air India Limited, Go Airlines (India) Limited, Interglobe Aviation Limited, Tata SIA Airlines Limited and SpiceJet Limited), it is estimated that the industry will report a net loss of ~Rs. 75-90 crore per day of shutdown of operations," Shah told this publication.
The total clampdown has created cash crunch for airlines in India, forcing them to go for salary cut and cut other variable expenses. An industry insider said few airlines are staring at bankruptcy if not helped externally in near future. Regional player Air Deccan has already ceased its operations due to zero traffic.
Care Ratings in a report on April 13 said, "The overall impact on business and financial risk profiles of airlines is expected to be negative in short to medium term.
The travel bans within and outside India along with visa cancellations is expected to impact the cash flows of all the airline operators as lease rentals are largely fixed in nature."
As flights remain suspended till May 3, Indigo said it will resume flight operations from May 04, 2020. "Initially starting with a slightly curtailed capacity, the airline will increase the operating capacity over the subsequent months, also re- opening selected international flights, depending on the existing international travel guidelines,” the airline said in a statement," the airline said.