April turns jinxed for India’s airline industry

 It’s back to square one for India’s civil aviation industry.

Published: 12th April 2020 09:46 AM  |   Last Updated: 12th April 2020 09:46 AM   |  A+A-

On April 5, Air Deccan became the first airline to cease operations due to the lockdown

Express News Service

NEW DELHI: It’s back to square one for India’s civil aviation industry. Not many would have thought that exactly one year after Jet Airways — one of India’s largest full-service carriers — collapsed, other airlines would be staring at a similar fate. However, the reason this time is a pandemic that has crippled every airline in the world. Jet Airways, after struggling for months, had grounded its entire fleet of over 100 planes on April 17, 2019, after a consortium of lenders decided not to infuse anymore money into it.

While the decision had drastically reduced passenger growth and took away thousands of jobs, it turned a boon for other airlines in the following months. The remaining carriers leased much of Jet’s aircraft, got lucrative slots and expanded overseas operations. Demand supply mismatch kept the fares relatively higher for months.

Two of India’s listed carriers — SpiceJet and IndiGo — saw record profits in the succeeding quarters. Indi- Go grew so fast that in October 2019, it placed orders for 300 Airbus aircraft in an estimated $33 billion deal. SpiceJet, despite taking a blow when Boeing’s controversial 737 Max aircraft was grounded in March 2019, turned the first Indian carrier to have a hub outside the country, in UAE. Three other private carriers — Vistara, Air Asia and GoAir — also expanded domestic and overseas operations. Excited with this success story, the government decided to privatise Air India again, after a failed attempt in 2018. A bid was floated earlier this year, which reportedly invited the interest of several big shots. Similarly, lenders and resolution professional of Jet Airways kept on extending the insolvency process, anticipating a better bid.

At present, it is nearly impossible to find a buyer for any airline. Dark clouds for domestic airlines appeared when cases of novel coronavirus erupted in China. India acted fast and suspended flight operations to the neighbouring country. Soon, one by one, the country sealed its borders as the disease was announced a pandemic. Indian airlines suffered the most when the Centre on March 23 announced suspension of all domestic flights till March 31, and later pushed this to April 14.

Major consultancy and brokerage firms anticipate Indian airlines to report record losses for the first quarter of FY21, due to the 21- day lockdown. IATA said that India’s aviation industry could suffer estimated loss of up to $8,838 million, which could result in 2.2 million job losses, if not assisted by the government. CAPA said the pandemic impact will be so severe that small carriers in India may go bankrupt.

Last Sunday, regional player Air Deccan became the first airline to cease its operations due to the lockdown. With the government yet to announce a stimulus package for the sector and chances of the lockdown getting extended, if not severely controlled, remaining high, the month of April is bringing more hardship to the sector than ever.

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