New Delhi/Mumbai: Not just truncated operations, the country's civil aviation sector is facing the real danger of massive downsizing and bankruptcies due to restricted cash flows subsequent to coronavirus outbreak.
Accordingly, industry insiders contend that travel-related restrictions as well as general fear and panic has reduced cash flows to a trickle.
The sector is the worst affected due to the outbreak. Airlines are forced to ground aircraft due to massive cancellations, rebookings, and truncated operations.
Presently, international operations have come to a virtual halt with many airlines deciding to suspend overseas flights.
Similarly, the domestic load factors have taken a hit with a 20 per cent drop in passenger traffic.
IndiGo has been forced to ground 30 planes in its fleet of 258 aircraft following the government's decision to bar international flights for a week as part of measures to deal with the coronavirus outbreak, a source said on Friday.
IndiGo operates to 24 international destinations across airports in the Middle East, Southeast Asia, South Asia, China and Turkey.
“After the temporary suspension of all international operations for a week from March 22 announced by the government, IndiGo has grounded as many as 30 aircraft in its fleet. Most of these planes were deployed on overseas routes," the airline source said.
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At present, India has 700 plus aircraft, with another 1,200 or more which are being delivered to the airlines.
Subsequent to the projected aircraft grounding, pay cuts and job losses will impact the sector's employees.
"In the short run, if the pandemic continues at this pace in India, we can expect airlines to ground aircraft, send employees on unpaid leaves and go for pay cuts. However, if it lasts longer, then there may even be downsizing and job losses in the industry," said Kinjal Shah, Vice President, ICRA.
"Currently, international operations have come to a virtual halt, domestic occupancy rates have fallen. This has led to curtailed cash flows for the airlines. Nevertheless, they still have fixed costs that need to be met. Therefore, profitability wise the sector is in deep stress."
In a report, CAPA India has said that as a result of the significant reduction in flying, Indian carriers may initially ground around 150 aircraft, with this number expected to increase as more domestic operations are curtailed over the coming weeks.
"If the decline in traffic continues to be severe, the majority of the fleet could be grounded by April. By extension, the reduced scale of operations could impact the requirement for around 30 per cent of airline staff and up to 50 per cent of ground handling staff," the report said.
Already, airline major IndiGo decided to institute pay cuts for a majority of its employees.
A few day's back, GoAir terminated the service contracts of expatriate pilots.
The move was in line with the reduced international capacity, it said.
(PTI amd IANS Report)
