The COVID-19 pandemic had a major impact on India’s aviation sector in 2020 and major airlines facing losses and hard times laid off their employees, put them on unpaid leave or cut their salaries.
The government also had to extend the deadline for submitting bids for Air India five times a year.
When the pandemic began to spread across the country, all scheduled foreign flights and domestic passenger flights were suspended on March 23 and 25, respectively. Scheduled domestic flights resumed on a limited basis from May 25.
The effect of this disruption can be measured through the loss figures of India’s two largest airlines. IndiGo suffered losses of Rs 2,884 crore and Rs 1,194 crore in the first and second quarters of this monetary year, respectively. SpiceJet posted losses of Rs 600 crore and Rs 112 crore in the first and second quarters, respectively.
Meanwhile, the government has allowed special flights of foreign passengers on the Vande Bharat project since May and since July agreements on air bubbles have been reached with some 24 countries. However, scheduled foreign flights remain suspended in India.
“The recovery of exports is expected to be slower and more difficult than that of domestic operations. This will hurt Air India, as in the past around 60% of its profits came from overseas operations,” aviation consultancy CAPA said in October.
It estimates that only 50 to 60 million passengers (between 40 and 50 million domestic passengers and less than 10 million foreign passengers) would do so in 2020-2021.
In 2019-2020, around 205 million air passengers (140 million domestic and 65 million) travelled to India.
CAPA India projected in October that Indian aviation would lose a total of $6 billion to $6. 5 billion in FY21, adding $4 billion to $4. 5 billion for airlines. As a result, the government’s plan to sell Air India has been undermined.
After failing to sell the national carrier in 2018, the government restarted the divestment procedure in January, but the pandemic forced it to extend the Expression of Interest (EOI) filing date five times.
The deadline for submitting expressions of interest is 14 December. The government has won several expressions of interest and will announce the names of qualified bidders until Jan. 5.
In an effort to make heavily indebted Air India more attractive, the government replaced the bidding parameters in October from the equity price to the offer over the company’s price. This means that the bidder will need to imply how much cash they would have. and how much airline debt they would have to bear.
However, the government has made it clear that at least 15% of the amount of the offer will have to be in cash and the rest in debt.
Air India’s debt amounted to Rs 58,255 crore as of March 31, 2019. Subsequently, in 2019, Rs 29,464 crore of this debt was transferred from Air India to a government-owned special purpose vehicle called Air India Assets Holding Company Limited (AIAHL).
While Air India failed with a personal owner in 2020, bankrupt airline Jet Airways controlled one.
A consortium consisting of UAE-based entrepreneur Murari Lal Jalan and London-based Kalrock Capital won the bid to relaunch Jet Airways on Oct. 17. It plans to start operating the airline until the summer of 2021.
The consortium said it is awaiting NCLT and regulatory approvals, adding the reinstatement of bilateral slots and traffic rights through the Ministry of Civil Aviation and the Directorate General of Civil Aviation (DGAC).
Slots (i. e. , the time zone in which a flight can land at the airport) as well as bilateral traffic rights (the number of flights an airline can operate between country cities) are valuable assets in the aviation sector.
When Jet Airways went bankrupt in April 2019, its slots and rights were temporarily granted through the government to other Indian airlines so they could start new flights and fill the source gap. Now that other airlines have added planes and flights with the expectation that those spaces and rights will remain with them, it is unclear what resolution the government will take on this factor in 2021.
Meanwhile, the construction process of Delhi’s second airport advanced in 2020.
Ten months after winning the tender for Jewar International Airport, Zurich International Airport signed a concession agreement with the government of Uttar Pradesh on October 7, 2020 to start its construction. The Swiss developer has decided on a consortium of 4 corporations to design its passenger terminal. .
The first phase of the airport structure is expected to be completed by 2024. Air shipping traffic in India saw a faster recovery in 2020 than passenger traffic, which has given the aviation sector some breathing room.
However, Anupama Arora, Vice President and Area Head of ICRA Ratings, said: “In FY2021, overall shipment volumes are expected to decrease by 17% to 20% in FY2021, and a significant recovery in shipment volumes is expected in FY2022. “
In the face of the crisis caused by the pandemic, all airlines took cost-cutting measures, such as layoffs or salary cuts in 2020. In April, GoAir sent most of its workers on unpaid vacation. Air India had cut its workers’ wages by 10% in April.
At the same time, SpiceJet and IndiGo have cut wages for all workers by 10 to 30 percent and 5 to 25 percent, respectively. In July, IndiGo also laid off 10% of its workforce.
AirAsia India slashed the salaries of its top executives by as much as 20% in April. Since April, Vistara has implemented an unpaid leave program for its seniority workers.
Currently, Indian airlines operate domestic flights at about 80% of their pre-COVID-19 degrees. Domestic flights are expected to reach pre-COVID-19 grades through March 2021.
While vaccination against the coronavirus is expected to start from 2021, the Indian aviation sector expects a much better year than 2020.
However, following the emergence of a new, more contagious strain of coronavirus in the United Kingdom, India announced on December 21 that all passenger flights connecting that country would be suspended from December 23 to 31.
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