India’s aviation industry was already struggling due to taxes, high-fuel costs, and now the pandemic comes. CAPA, Centre for Aviation in Sydney says that India needs around $2.5 billion to continue its airlines. Due to the lockdown amid pandemic India banned commercial passenger flights, thus leading to almost collapse.
Moreover, not only India but other countries too faced Airlines struggling. But, the Europe, the U.S Government’s provided a $123 billion as support to airlines amid the COVID-19 crisis. But the administration of Prime Minister Narendra Modi did not infuse cash support to industries or airlines that are backed by several private business, that too by billionaires in some cases.
The country’s airlines need significant investment or one or more will fail, said Satyendra Pandey, an independent consultant and former head of strategy at Go Airlines India Ltd.
Before the pandemic, India saw collapse of two major airlines. Collapsed airlines lncluded Jet Airways India Ltd., the country’s oldest private-sector carrier, and Kingfisher Airlines Ltd.
Apart from higher levies imposed on jet fuel, Indian rupees too have fallen against dollar. This hurts the Indian airlines severely.
“India’s Aviation Industry Needs Around $2.5 Billion To Continue”
CAPA’s South Asia CEO Kapil Kaul said on Bloomberg Television that with no support to airlines from the government only tycoon owners can infuse the cash. However, having healthy back-ups do not assure salvation, as showed by Jet and Kingfisher.
As per data compiled by Bloomberg, Spice Jet Ltd., Air India and Vistara had cash ratios of less than 1, indicating there’s a risk of not fulfilling current liabilities with cash and cash equivalents.
Many airlines including Vistara reduced their expenses by lowering their operating expenditures. Airlines are also cutting-off their staffs inorder to save expenses amid the Pandemic.
“The growth of airline capacity in India far outstripped demand at economic prices, placing the viability of fleet plans and entire carriers in doubt,” said Robert Mann, New York-based head of aviation consultancy R.W. Mann & Co. “Covid will accelerate the reduction of capacity, in a number of cases by extinguishing airlines.”