Coronavirus Pandemic | Aviation Sector Worst-Hit, Many Companies May Be Ruined

Aviation, transportation, hospitality and restaurant businesses have been badly hit by the global outbreak of novel coronavirus. While hospitality is projected to report over Rs 30,000 crore of loss of revenue during 2020, the Aviation sector will report losses in excess of Rs 8,200 crore in the coming quarter as international and domestic flights stay grounded.

Aviation consultancy CAPA projected initial losses of USD 3.3-3.6 billion for the Indian aviation industry in the first quarter of FY2021 in the eventuality of all air services including domestic remain shut until June due to the coronavirus pandemic. The pandemic has had a significant impact on the aviation industry due to the stringent border controls by a host of countries and imposition of the travel ban on the people of other nationalities to contain the virus infection.

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The Indian government has also suspended all air services among the several measures to prevent if from getting a large part of the population infected.

" India''s aviation sector could incur losses of USD 3.3-3.6 billion in 1QFY2021. Assuming that all domestic and international operations remain grounded until  Jun 30,"  the Centre for Asia Pacific Aviation (CAPA) India said in its preliminary report.

"Even with some partial resumption of services in May and June, the financial outcomes may not change significantly," the CAPA said. The CAPA also sought "urgent" government intervention and coordinated industry response to address all the requirement of the aviation industry. According to the CAPA, the airline sector losses are expected to be around USD  1.75 billion while that of the airports and concessionaires at around  USD 1.50-1.75 billion and another USD 80-90 million losses of the ground handling companies.

Noting that the domestic airline sector was already vulnerable even prior to the advent of COVID-19, the CAPA said most Indian airlines have not structured their business models to be able to withstand even regular shocks, such as elevated fuel prices or economic downturns, let alone once-in-a-century events.

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According to the CAPA, India''s airline system is certainly "not prepared" for such a severe systemic shock, and this will have an impact on the entire aviation value chain, including the airport operators; duty free, retail, F&B, MRO,among others.

"The entire sector is now in a state of crisis which will certainly impact FY2021 and quite possibly well beyond," it said.

The National Restaurants Association of India (NRAI) has warned that even 10-20 per cent job losses among its 7.3 million employees in restaurants across the country would mean up to 15 lakh unemployed. Something that would have severe social consequences.

 With travel and visa restrictions in place, Indian aviation sector saw fares crash by as much as 40 per cent on certain air routes. Several air carriers, including Vistara, GoAir, SpiceJet, have suspended international flights amid dwindling demand and fares.

Prime Minister Narendra Modi on Tuesday announced a 21-day complete lockdown from Wednesday, stating that it was the only way of breaking COVID-19 infection cycle.

(With agency inputs)

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