NEW DELHI: Indian airlines, whose appeal to resume operations has not found merit with the government, is now undertaking cost-cutting measures to ensure they fly when the lockdown is lifted. Analysts say the industry will report net loss of Rs 75-90 crore per day during the lockdown period.
The revenues of airlines have been hit ever since the Central government halted operations of domestic and international commercial flights in the wake of coronavirus outbreak. Despite the airlines apprising the government of their plans to safely resume services, the Centre has felt it is too early to lift travel restrictions. The Directorate General of Civil Aviation on Tuesday clarified that domestic and international flights will remain suspended till May 3.
The extended lockdown will only add to the sector’s woes. According to Kinjal Shah, vice-president at ICRA, the industry will report a net loss of Rs 75-90 crore per day. “The Indian aviation industry is characterised by high fixed costs. About 35-42 per cent of the airlines’ expenses are fixed. Considering the operating expenses of the Indian aviation industry, it is estimated that the industry will report a net loss of about Rs 75-90 crore per day of shutdown of operations,” Shah told TNIE.
The total clampdown has created cash crunch for Indian airlines, forcing them to go for salary cuts and reduction of variable expenses. Tata Group-backed Vistara on Wednesday said they are undertaking a number of steps to conserve cash, including compulsory no-pay leave of 1-3 days for about 30 per cent of its workforce for the April 15-30, 2020 period. This decision does not impact the remaining 70 per cent of Vistara staff.
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 reopening selected international flights, depending on the existing international travel guidelines,” the airline said in a statement.
Bleak future
A few airlines are staring at bankruptcy in the near future, if not helped externally, said an industry insider.
Regional player Air Deccan has already ceased its operations due to zero traffic.