COVID-19 had massive impact on Indian aviation sector in 2020

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Indian aviation sector

New Delhi: The Covid-19 pandemic had a massive impact on the Indian aviation sector in 2020 and major airlines facing losses and challenging times laid off employees, sent them on leave without pay, or cut their salaries. The government also had to extend the deadline for submitting bids for Air India five times during the year.

When the pandemic started spreading across the country, all scheduled international flights and domestic passenger flights were suspended from March 23 and March 25, respectively. Scheduled domestic flights were restarted in a limited manner from May 25.

The effect of this disruption can be gauged by the loss figures of India’s two largest airlines. IndiGo incurred net losses of Rs 2,884 crore and Rs 1,194 crore in Q1 and Q2 of this fiscal respectively. SpiceJet posted net losses of Rs 600 crore and Rs 112 crore in Q1 and Q2, respectively.

“The revival of overseas travel is expected to be slower and more challenging than domestic. This will hurt Air India in particular as around 60 per cent of its revenue was earlier generated from international operations,” said aviation consultancy firm CAPA in October.

It estimated that just 50-60 million passengers — 40-50 million domestic and less than 10 million international would travel in 2020-21. In 2019-20, approximately 205 million air passengers — 140 million domestic and 65 million international — travelled in India. CAPA India projected in October that the Indian aviation industry will lose a combined $6-6.5 billion in FY21, of which airlines will account for $4-4.5 billion. As a result, the government’s plan to sell Air India has been hit.

Air cargo traffic in India has been showing faster recovery in 2020 as compared to passenger traffic. This has given some respite to the aviation sector. However, Anupama Arora, VP, ICRA Ratings, said, “In FY2021, total cargo volumes are expected to decline by 17-20% in FY2021 with meaningful recovery in cargo volumes expected only in FY2022.”

To survive the pandemic-induced crisis, all airlines took cost cutting measures like firings or pay cuts in 2020. Currently, the Indian airlines are operating domestic flights at around 80 per cent of their pre-Covid levels. The domestic services are expected to reach their pre-Covid levels by March 2021.