Unfolding virus crisis may take Indian aviation back by half a decade

The magnitude of the unfolding trauma for India's airlines is now too severe to ignore.

The "Covid-19 & the State of the Indian Aviation Industry" report, released by Capa India recently, reveals that local air travel in the country will likely crash from 14 crore in 2019-20 to around 8-9 crore in the next financial year (2020-21).

It is worth noting that 8-9 crore was the level seen in 2015-16. A ToI report, citing data from Directorate General of Civil Aviation (DGCA), puts the the number of domestic air travellers in the country at 8.1 crore in 2015 and 9.9 crore in 2016.


So, the findings essentially means the unfolding novel coronavirus crisis is all set to take India's aviation sector back by at least four to five years.

The Capa India report had some more dire predictions to make. The most significant ones among them include:

(a) The Indian aviation sector is likely to shrink significantly, even if some of the vulnerable airlines manage to survive.
(b) For India to return to a pre-Covid operational fleet of 650 aircraft is likely to take up to 12 months from the time that restrictions are lifted, and this may be conservative.
(c) As per current estimates, there could be 200-250 surplus aircraft for the next 6-12 months.
(d) International traffic is expected to fall from approximately 70 million in FY 2020 to 35-40 million in FY 2021, and possibly lower.

Capa India added that these were only initial estimates and that they would be continually revised as the situation becomes more clear.

This comes amid blanket flight cancellations — a time when airlines are faced with the spectre of massive cash burn in the wake of having to refund sold but unused tickets.

A latest Bloomberg report outlined how the fight to survive the ongoing crisis has pitted airlines companies against grounded flyers the world over. Normal-time refund rules are not being followed now as rampant lockdowns have wrecked schedules for weeks, forcing airlines to park their fleets and guard their cash as revenue withers, said the report.

Some airlines, such as IndiGo, have opted for the credit shell strategy instead of refunds. India's biggest airline is creating credit notes for every cancelled ticket, which flyers can redeem later any time up to a year.

Air India won't levy no-show charges till the end of this month. It means passengers can use the fare to book a future flight even if they don’t pro-actively cancel tickets.

Go Air is offering passengers of a cancelled flight the option to even change destinations at a future date. Passengers, however, will have to pay the fare difference, if any.