CEO of IATA, Alexandre De Juniac expects demand in India to fall by 50% and said that almost 3 million jobs in the Indian aviation sector are at risk. The comments came during Friday's CAPA India webinar.
CAPA India held its first, in a series of webinars on May 29th, 2020, which AeroNewsX attended with various senior officials of the Indian and world aviation industry, to discuss, designing a sustainable roadmap for the revival of Indian aviation.
The Indian aviation sector resumed domestic operations on May 25th after a 60 day halt due to the COVID-19 Pandemic. Although 33% of flights were set to resume for the summer schedule of 2020, only 20% of flights have in fact restarted averaging a load factor of about 50% due to different quarantine rules and COVID tallies in different Indian states. The resumption of services was a little chaotic, but it is expected to be settled in a week or two. Fares have also been capped by the Indian Government until August, to prevent overcharging by the airlines. Despite this, the Indian airlines are happy to be flying after a two-month gap. One relief to all the airlines is the 40% reduction in fuel prices.
Mumbai Airport CEO, Rajeev Jain says: “[The] Situation is grave, and according to me it will take a much longer time for things to normalize, but after this opening, initial response of passengers is good and we have to use this time in generating confidence in passengers that flying is safe.”
“We’re not in favour of fare caps, we’re a market economy. We hope it is temporary," said AirAsia India CEO, Sunil Bhaskaran at the Webinar.
The Pandemic is unpredictable, no one knows when it will end and how long will it take for things to normalize. CSIA Mumbai (BOM), expects passenger demand to return to “normalcy” by the Indian festival of Diwali in mid-November, but is still uncertain about the future and wants to see how the disease will pan out.
As the pandemic continues to intensify, all or most expansion plans of airlines and airports have been put on halt. Three months ago, expanding internationally was the biggest thing on the agenda for AirAsia India, their CEO highlighted, but as of now, it has stepped back. He also said that they were lucky to not have international destinations on their route map, as the hit to their costs would have been much worse as domestic traffic and operations will return to normalcy much quicker than international operations. It would also take time for borders to open completely.
IATA CEO Alexandre De Juniac said, “We cannot lift borders unilaterally, need to lift them corporately along with partners and neighbours.”
Airports around the world have also taken a huge toll on their earnings and are eager to bounce back and start flights, as many airports are running out of cash. The aviation sector is expected to incur a USD 97 Billion loss, which is a 57% decline in revenue. Unlike the 2009 Financial Crisis, where airports were only marginally impacted, the coronavirus pandemic comes with many more challenges and risks as it is “unprecedented”. But flying in the post-COVID world is a completely new experience, with new rules and regulations. To assist airports with this, the ACI World in collaboration with the World Health Organisation (WHO) and ICAO Council is coming up with a new set of rules and principles for airports to follow by Monday, June 1st, 2020. These may include social distancing, compulsory use of face masks, disinfecting surfaces around the airport premises, use of biometrics at customs and immigration, and more. ACI World Director General, Angela Gittens hopes that airports around the globe adopt the principles when released, to prevent transmission at the airports.
“If India would embrace those principles along with other countries that will go a long way to getting business restored, getting passenger confidence restored,” says Gittens.
She added: “Airports have always been seen as a fairly stable system, pretty resilient. But this has changed. There have been severe downgrades in debts which is going to cost airports in the whole aviation system a lot more money over the next several years as they try to re-enter the credit markets.”
Star Alliance CEO Jeffrey Goh maintained a positive outlook on the crisis and said that the region would come out of the negative. Post 9/11, security at airports and on flights was heightened in respect to sharp objects, liquids, and aerosols, but the time now is different; now there is a requirement for bio-security to ensure the spread of the virus is minimized. Goh said that post-COVID, there may be a need for Full-Service Carriers (FSCs), or all business class airlines and aircraft, but when and what kind of service that maybe he does not know right now.
Unrelated to the pandemic, Jeffrey Goh was asked about the induction of a second Indian carrier into the Star Alliance network. He responded that he was open to it. If an airline brings a value proposition, they would be happy to welcome them. They have always wanted to be a part of the Indian aviation sector and to capture the ever-growing domestic market, which is why Air India was made part of Star Alliance. When asked about this struggling airline and the help from the Indian Government, Jeffrey Goh said that Government assistance would be imperative to save the airline, and a lot of effort was being put in to safeguard the national carrier, but the present crisis has become a hurdle in the process.
“We are not closed for business. If there is a value proposition, we will look at that, in a post COVID world these would be accentuated” said Goh.
Overall, the pandemic has crippled the aviation industry the world over and the support of all stake-holders would be necessary to bring the industry back to normalcy and on its feet. The aviation industry would not want to see the loss of more airlines or any airports. Help from governments will be necessary to save the aviation industry in these “unprecedented” times.