INDIAN AIRLINES FLY HIGH WITH FREIGHTER SERVICES

While the Indian aviation industry struggles to keep its operational costs balanced, a questionable economy not just of the industry but also the entire nation is staring straight in the times to come

- AYUSHEE CHAUDHARY

ANALYSIS BY THE INTERNATIONAL AIR TRANSPORT ASSOCIATION (IATA) clearly states that the impact of the outbreak of the pandemic COVID-19, is severely challenging the existence of the global air transport system as never before. While India is comparatively less hit as of now, but with the imposed lockdown, the Indian aviation industry is not far from the adverse impacts. According to IATA, before the outbreak, India‘s air transport industry’s economic contribution was estimated at $35 billion, supporting 6.2 million jobs and contributing 1.5 per cent to GDP in India. However, COVID-19 has led to the destruction of air travel demand on an unprecedented scale. India’s scheduled carriers are currently in grave and immediate danger of insolvency, states IATA. A cessation of operations would trigger a host of serious consequences. The contribution that the airline industry makes to the economy of India is sure to be wiped out if the airline industry collapses. At stake is not merely the survival of the airlines and related industries, but whether a safe, efficient and viable commercial aviation system will be available to contribute to the post-COVID-19 restoration and recovery of trade, travel, and indeed the economy of India itself, points out IATA.

While airlines are trying their best to adopt every measure possible to mitigate the impact by cutting avoidable costs, the reality is that airlines have substantial fixed costs which cannot be reduced by cutting capacity – salaries need to be paid as do aircraft financing arrangements and other fixed costs. In recent weeks, airlines have been paying out more by way of refunds than they have received in new booking revenues, meaning that their reserves are rapidly depleting. Airlines risk running out of cash in the very near future.