The Future of Indian Aviation Industry

By Singh, Published on August 23rd, 2020 in Blog, News

By: Ravreet Singh

Since February 2020, the COVID-19 pandemic has been hitting aviation Industry not only in India but world hard. India is a price sensitive market and with around 6-7 major airlines operating in the country at present, competition between these airlines is very big. Since, the aviation industry was not prepared for the situation like COVID-19 pandemic, airlines are now struggling to stay afloat. After a 2 month flying ban in the country which was lifted on 25th May, we look at the present and future of the industry in India.

The Present Situation

While 3 months have passed now, since domestic travel got resumed in the country, airlines are still directed to operate at their 45% summer capacity. Due to the reduced air travel demand, the number of passengers flying daily remain constant between 70,000 and 90,000 in the country at present. At average around 3,35,000 passengers traveled daily in 2019.

Due to average load factor of around 50% at present and also ban on international travel since 25th March, now extended till 31st August 2020 in the country, airlines are now struggling to stay afloat, and are doing everything they can to reduce their daily costs.
Some Airlines in India which resisted for long to not to lay off any of their employee due to this pandemic has started taking drastic steps to reduce their daily costs. India’s largest private carrier, IndiGo, announced layoff of 10% of their workforce, which is around their 2,700 employees. It will be keen to see what other airlines in India, will do to survive the pandemic.

Airlines are also deferring their new orders and also returning their leased planes to their lessors, which may further create deep impact on industry in India in future.

If we talk about present situation of World aviation industry, almost every airline’s financial situation is impacted due to the pandemic. World’s biggest aircraft manufacturers, Airbus and Boeing has also taken steps to reduce their costs like decreasing the production rate of their aircrafts and also announcing layoffs. While airlines are losing millions everyday, airports are also losing money every day. London Heathrow Airport recently reported a loss of $1.30 Billion in first 6 months of 2020 as traffic was 60% down, it reported in a report.

The Future

International Air Transport Association (IATA) in a recent report said that traffic in India in 2020 will be 49% less compared to last year. Also, in other report about recovery of traffic for world aviation Industry, it reported that it may take more 2 years now then previously forecasted for 2022, thus further creating challenges for not only many airlines in India but World to stay afloat.

India’s daily coronavirus cases have recently breached 70,000 mark, which is further increasing fear between travelers of getting the virus while travelling. If the present situation continues for long, India may head for 2-3 major airlines in future.

India with population of 1.3 billion people only has around 500-600 aircrafts at present but these numbers will also reduce as airlines are returning their leased planes. Post coronavirus period, air travel demand will gradually start increasing and if India head for 2-3 major airlines in future, the airlines at that time may not able to cater the demand. As a result, air fares may sore and air travel demand may decline.

Travel Post Covid Period

So, how will the air travel look like post COVID period? Travel post COVID period may not look like same we did before the pandemic. The COVID-19 pandemic has made us learn important things about safety of our health. It may be common to see, people following social distancing rules, wearing masks, etc in post-covid period also.

More people in future may choose air travel over other medium of transports, as airplanes are not only the fastest mode of travel but also the safest. Airplanes are equipped with HEPA air filters which is equivalent to air filters in hospitals. HEPA filters in airplanes regulates air after every 2 minutes and also ensures that the air is 99.9% free of any kind of bacteria. In addition to this some Indian airlines are currently letting their passengers to book their adjacent seat and even full row for them. Airlines may continue to offer this to their passengers in future as well. The next 6 months are very crucial for Indian airlines as it will decide their future. Lets hope best for them in future.