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Covid-19 Impact on Indian aviation Sector or Aviation Industry

 

Covid-19 Impact on Indian aviation Sector or Aviation Industry



When Covid 19 pandemic started:

Aviation sector play important role in Indian economy, we cannot think about abroad without Aviation sector. Nowadays, It is very easy to move any country if you have visa of that country where you want to go. Even In some countries there is no need of visa for Indians or we can say on arrival visa is the option for Indians in some countries. Before 23rd march and 25th march 2020, everything was running very smooth with Indian aviation sector. Even there was some good news into the Indian market about the enhancement of the foreign direct investment in Indian aviation sector. Suddenly every changed, when pandemic covid-19 had given knock into India & Many international fights &domestic flights suspended due to covid-19. It was very shocking news for whole world.

Countries like Australia, New zealand closed their International borders. It was very surprising for whole world but it was precautionary measure these countries, after few days, everyone heard many news into the media that other countries also close their international borders. It was sad news for aviation sector but Governments of such countries had taken this decision to save the lives of their country people which were a good step for all.

Impact of covid 19 pandemic on International flights & on Airline companies:

The covid-19 had impact on the aviation sector at massive level. Due to this impact of covid, Aviation sector faced major losses in 2020-21. Many airlines had sent their employees on leave without pay.  The losses of the Airlines of India are on higher side due to this pandemic. For example, If we will check the data then Indian major airlines like Indigo airlines posted a net loss of nearly 2882cr In first Q! And in Q2 it posted the net loss of 1194cr nearly in the same fiscal year. The India biggest domestic airline Spicejet ltd faced huge loss of 600cr in Q1 & 112cr in Q2 in same fiscal year. These losses were biggest for any airline company.

Decrease in number of passengers & estimated losses:

During this pandemic time Indian government permitted some international flights under the name of the mission VANDE BHARAT. But the commercial flights were still suspended.  As per the Data published by the Aviation ministry, in 2019-20 nearly 205 million passengers travelled to India. Out of these 205 million passengers, 140 million passengers were domestic & 65 million were international. In the response of new research & data, it is estimated that only 10 million international passengers will travel in 2020-21. If it happens then it will be biggest loss for the Indian aviation sector. Even it is a setback for the Air India revival plan which was already suffering from the loss. It is also estimated that Indian aviation Industry will face loss of 6 to 6.5 USD billion in FY21. In this projected loss, airlines will face the loss of 4 to 4.5 USD billion. It will surely hit the government disinvestment plan Air India and date of expression of Interest had extended, it had already extended five times in the past. As on 31st march 2019, Air India was carrying the debt of 58, 255 crore. Later on, nearly half of the debt of Air India transferred to Air India assets holding company ltd. The jet airways is another example of huge debt ridden company and waiting for the revival. Jet airway also went for bankrupt in April 2019. These all planes has postpone due to covid pandemic. Even Second largest Delhi Airport  project is still under process or delay.

  Airline companies strict actions plans:

Due to this pandemic many airlines had taken strict action by firing or pay cut of the employees in 2020. The airlines like GoAir, sent many of its employee on leave without pay. Air India had also taken strict action by cutting their employee salaries by 10% as per media news. Further the domestic airlines companies like indigo and Spice jet ltd had followed same step & cut their employees salary by 10 to 30% or some others by 5%. The other big name Air Asia has cut their senior employees salaries by 20 percent.

Current situation of Indian Airlines:

There is no any question that the tough time is going in the Aviation sector and it is not limited to India only but also in other countries like china, Uk, US, Australia, Canada but rest of the countries have more cash and these countries may announce stimulus package to this sector but India is already under debt and covid 19 has also left impact on other industries of India. Aviation sector is already under higher debt and it is very expensive sector too. We may see some improvement in coming few months because covid situation is under control in all countries and vaccination drive is also running good in India. But the situation is still uncertain for this sector because different strains of corona virus has predicted in the recent time. But vaccination has given lot of hopes to airlines companies. If Commercial flights will restart then vaccination passport will play important role in this sector and responsibility of airlines companies will be increased. Keep the air ticketing pricing at lowest levels is also a biggest challenge for the airlines companies those are already under deep debt. Recently Airport authority of India reports big fall in revenues which is 92% approximately. Also,  CAPA India estimated that jobs will fall in this sector by 30 percent which is a big damage. The other wing of this sector, Indian carriers also faced decline in revenue by  86%.

In nut shell, We can say that Indian aviation sector is under deep trouble and it will be very challenging for the current Government to come up with promising plan for this sector. Even big investors of the Indian stock market have shown interest in the Indian aviation sector. Even many of Airlines stock had given good run up in the past few weeks but it is not enough because stock price movement cannot be relate with the current financial situation of the sector. Once the pandemic situation will be improved in India and in other countries of the world, it will increase the confidence of the people to move around any country where they were planning to go. It may help to increase the revenue of aviation sector in coming months.

Also read: Impact of industry on Indian Economy

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