February 24, 2024


Delighting finance buffs

Indian aviation staring at an emergency, govt must act now: IATA

Speaking to India Today in exclusive interview, Conrad Clifford, Regional Vice-President, Asia Pacific at the International Air Transport Association (IATA) said, “The situation for India is very severe indeed”.

In a revised forecast issued by IATA, the trade association that represents 82 per cent of the world’s airlines including Indian carriers like Air India, SpiceJet, Vistara and IndiGo, said Indian aviation will see 47 per cent fall in passenger demand, which translates into a loss of 11 billion dollars in passenger revenue for airlines in India.

“This is absolutely unprecedented. It is particularly damaging when you think that pre-Covid India was the fastest growing market in the world and we celebrated 54 months of double digit passenger growth, which is unprecedented. India was swiftly moving towards number three spot in terms of local aviation markets,” Conrad Clifford said. “This (impact of Covid-19) has been a cataclysmic reverse,” he added.

India imposed a ban on international flights in the third week of March, which was subsequently followed by a similar ban on domestic operations after the announcement of the first phase of the nationwide lockdown, starting March 25.

IATA, in its forecast, has estimated that 3 million jobs in the aviation and its dependent sectors could be at risk as a result of the aviation sector taking a hit. Employees within the sector have already taken pay cuts, not received their salaries at all, or been compelled to go away on leave without pay.

IATA said that governments need to treat this as an “emergency” and step in quickly to do something. Some of the measures that the airline body suggestsed was adopting include direct financial support by governments, loans and loan guarantees, airlines being granted access to corporate bond markets, so they can raise the money themselves and government-related charges being deferred or done away with entirely to reduce the burden on airlines.

So far, despite representations from various airlines, the Indian government is yet to step in and bail airlines out. In the meantime, airlines have been supporting the government’s efforts in the transportation of critical medical supplies while the national carrier Air India has aided in evacuation efforts ahead of a complete shutdown. Reports suggested the latter is being prepped again for evacuation of stranded Indians from foreign countries as soon as the second phase of lockdown comes to an end on May 3.

“Other countries are supporting their airlines and when we get to the end of this pandemic, airlines in countries where the governments have supported them will be in better shape, will compete better. Those countries will enjoy a competitive advantage against countries that have decided not to support their airlines,” Conrad Clifford pointed out.

“Countries that are supporting their airlines are high value export countries like China and South Korea because they realise the importance of aviation in terms of connectivity and the economic supply chain,” he said.

As India prepares to slowly limp back towards normalcy, the aviation sector is preparing for a new ‘normal’.

IATA said it is working with the World Health Organisation (WHO) to try to develop a blueprint for the international restart of aviation. IATA said it wants measures that are “science-based, not emotion-based”.

For example, Conrad Clifford said, “Some governments are saying that the center seat on aircraft should be kept empty, as part of social distancing. Firstly, there is no scientific evidence to support that measure that it has any effect at all, except that it does render 90 per cent of the world’s airlines unprofitable, because it restricts the maximum load factor to about 67 per cent. Measures like that, we’d like to discuss with governments.”

The priority of the aviation sector will be to come up with measures that protect people and are also viable, especially at a time when travel inhibitions will continue to dominate even as restrictions on flying are lifted slowly.

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