June 13, 2024


Delighting finance buffs

Challenges galore as airlines get set to fly from May 25

The aviation sector is all set to resume operations in India after the Civil Aviation Ministry announced reopening domestic airline services in a phased manner in the country. However, there are several rules that airlines have been asked to follow, both precautionary as well as in terms of pricing.

While the government’s order to resume operations — limited to just one-third of an airline’s total flight capacity — has been welcomed by the sector, critical challenges lie ahead for India’s aviation companies.

Since the lockdown, most airline companies and allied sectors have been completely put out of action and revenues have steeply declined. There have been large-scale furloughs and layoffs at airlines.

Read | Delhi-Mumbai flight tickets capped at Rs 10,000: Govt says domestic air fares will be regulated for 3 months

Many from the sector have asked for a direct relief or an income support scheme to at least support their employees. But experts say the government only announced long term support measures for the sector, which are welcome but not a remedy to the immediate concern.

It may be noted that airlines are resuming operations after almost two months, and some have failed to pay salaries to their employees — from pilots to cabin crew and other staff — for over two months.

Some senior Air India pilots, who are a part of airline pilot bodies, penned a letter to the Civil Aviation Ministry to highlight the bulging wage backlog at the national carrier.

They said they are now reaching a breaking point, saddened by the fact that they are at the forefront of government’s Covid-19 international rescue operations, but are only getting “lip-service”.

There are many private airlines where there have been deep pay cuts while some others have been sent on leave without pay (LWP). Some have kept the damage limited to delayed salaries.

Airlines are also encountering other charges like maintenance of aeroplanes, even as they stay grounded in the hangers due to the lockdown.

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Moreover, airports also have to pay airport charges. All these are substantial charges, making it difficult for airlines to generate revenue required to run operations, especially because there is a cap on their capacity and the price they can charge from passengers.

The aviation ministry has released a detailed list on prices airlines will have to follow for some time to protect customers’ interest.

Turbulence not over

Ratings agency ICRA’s vice president Kinjal Shah recently told Mail Today that domestic carriers are approximately losing Rs 75-90 crore per day without any operations and that their debt level is expected to rise to Rs 46,500 crore by FY22.

The sheer uncertainty pertaining to travel and tourism in the post-coved world may significantly dent travel over the next few months.

A top executive of an online travel agency told India India Today.in that the aviation sector needs more direct relief from the government in order to recover from the shock. Considering the fact that it is a critical sector, many are hoping from some concession from the government.

In the absence of direct income support, GST relaxation and airport charge reduction, the sector may not crumble under pressure.

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Care Ratings in a recent note questioned the relief measures announced by the government to support the cash-starved aviation sector. It indicated that the measures are long term measures and may not help tackle the present crisis.

READ | Ask national carrier to roll back 10 per cent pay cut: Air India unions to aviation min

ALSO READ | IndiGo rolls back pay cut in April salary of employees in deference to govt’s wishes

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