New Delhi: The aviation sector, like several other sectors, is facing an unprecedented crisis in the wake of the COVID-19 pandemic. Aviation experts, while speaking to ETV Bharat, opined that airlines in India will require funding support from the government to meet their expenses until the cash inflows resume.
"Major airlines across the world getting government bailout but it is difficult to say that India will be able to do so. However, if the government cannot give cash, they should then reduce all kind of taxes which are on the airlines, on air tickets and also the airport authority charges can be reduced," said Sanat Kaul, Chairman of International Foundation for Aviation, Aerospace and Development (IFFAD).
"In my opinion, if the government can not give indirect concessions on taxes, GST everything has to be sorted out and given. A considered thinking has to be done, this is the thing which has to be done at the Prime Minister's level but they are doing nothing. Civil Aviation Ministry alone cannot do anything alone to revive the aviation sector," he added.
Expressing disappointment, insiders in aviation industry said that they were expecting cash bailout or tax concessions for the aviation sector by the government but the measures announced by Union Finance Minister Nirmala Sitharaman in her May 16 press conference for civil aviation comprised the ones that were announced before and it was focused only to improve airspace management, making India an MRO hub and privatisation of government airports.
Notably, last month, industry body FICCI has sought a bailout package for the domestic aviation industry, including direct cash support from the government, interest-free soft loans and a two-years tax holiday to help the sector overcome the COVID-19 crisis.
FICCI Aviation Committee Chairman, President and Managing Director of Airbus India and South Asia, Anand Stanley had said in his recommendations to Civil Aviation Secretary Pradeep Singh Kharola that the aviation industry is facing a crisis of unimaginable proportion due to the impact of the COVID-19 pandemic.
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With prolonged travel restrictions in place around the world, one of the major challenges faced by the aviation industry is a massive plunge in cash reserves as fleets remain grounded for almost a month now. Many airline companies are on the brink of bankruptcy.
According to the International Air Transport Association’s (IATA) recent analysis, the airline industry’s global debt could rise to US $550 billion (Rs 4.17 lakh crore) by the end of this year, a massive 28 per cent or US$120 billion (Rs 0.91 lakh crore) increase over levels at the start of 2020.
The German government, on Monday, approved a €9 billion (Rs 750.84 crores) bailout of Lufthansa, Europe’s biggest airline by revenue. This has raised a debate whether Indian government must also announce a similar package.
When asked the same, Kinjal Shah, vice-president at rating agency ICRA Ltd, told ETV Bharat, "While some airlines have sufficient liquidity and/or financial support from a strong parentage, which will help them sustain over the near term, some airlines, which were already in financial stress, are facing an existential crisis. Many airlines have already started undertaking salary cuts, including leave without pay and laying off pilots and crew members to cut costs. However, until the cash inflows resume, the airlines will require funding support to meet their expenses."
Domestic flight services resumed on Monday in India after a gap of 2 months and on the very first day 50 per cent flights got cancelled, reacting to the statement, Kinjal Shah said, "It's not about capacity. It is about the passenger growth. ICRA estimates the industry will witness 41-46% de-growth in domestic passenger traffic in FY2021. So airlines have to manage their capacity in line with the passenger demand and the viable passenger load factor."
Domestic flying in India restarted on Monday after a gap of two months with several States including Maharashtra, Kerala and Uttarakhand putting in place quarantine measures for air travelers arriving there.
IATA, a trade association that represents 82 per cent of the world's airlines including Indian carriers like Air India, SpiceJet, Vistara and IndiGo, said that India was the fastest-growing domestic market in the world for the fourth year in a row at 18.6 per cent per annum, followed by China at 11.6 per cent but the Indian aviation sector will be the worst hit by the COVID-19 crisis and 29.32 lakh jobs in the country's aviation sector are at risk.
Air India employee unions seek Rs 50,000 crore financial package for flag carrier
A joint forum of Air India employees and staff unions has sought a Rs 50,000 crore financial succour from the government for the national carrier, stating that the airline is a necessity for the country.
In a letter to Prime Minister Narendra Modi, the Joint Forum said that Air India is a "necessity" for the country, especially in times of crises, and a financial package will not only help the flag carrier but also the entire aviation sector and the economy.
"We thank you for the financial package of Rs 20 lakh crores to boost industry and the economy. As you will agree that civil aviation is of paramount importance in today's context and therefore it is extremely necessary to boost the aviation industry and restore normal operations at the earliest, which is crucial for the economy to stabilise.
"In view of this, we request you to kindly grant Air India a financial package of Rs 50,000 crore which will go a long way in ensuring that Air India emerges as the strongest and best airline of India," the Joint Forum said in the letter.
(With PTI Inputs)
