When India’s government ordered a nationwide lockdown to combat the COVID-19 pandemic, a mass migration of millions of people to their home villages began. They didn’t fly home though as the country shut down its entire aviation network except for critical cargo flights and some repatriation flights from overseas.
The government suspension of all scheduled domestic and international flights is expected to last until 15 April, although it may be extended if the government continues the lockdown, which some officials are calling for.
A recent report by the Indian arm of the CAPA advisory group, says it will take months for aviation to even get back in the air and years before it will totally recover. CAPA says the industry in India will “shrink significantly” and that within the next 6-12 months there could be at last 250 surplus aircraft.
CAPA India said any recovery will be “slow” because of the economic impact of the virus not just on India but on the rest of the world and will also be hurt broken supply chains, low consumer confidence and concerns about “lingering outbreaks of COVID-19, especially if travel insurance companies refuse to provide cover for associated medical expenses or travel disruption costs”.
The report also said making any projections about when air travel will return to any type of “normalcy” are difficult because aviation restrictions are unlikely to be lifted in one fell swoop, “particularly when it comes to international travel”, citing the example of China, Hong Kong and Singapore that have all re-imposed travel restrictions after an initial relaxation resulted in an acceleration of new cases, mostly imported by overseas arrivals.
CAPA also said in its report that there are “high expectations” the Indian government will offer some kind of bailout to the aviation industry there, “but this may be unrealistic”.
Airlines in India are being encouraged to deal with the crisis now by deferring scheduled deliveries of aircraft and start planning for smaller operations.
“As the saying goes,” CAPA said in the report, “never let a good crisis go to waste. This may be the best opportunity for Indian carriers to make difficult calls to rationalise their operations and clean up their balance sheets. Consolidation, collaboration and supply-side correction should enable airlines to move away from market-share driven strategies such as loss-leader pricing. Aggressive expansion without the necessary cash and balance sheet has been repeatedly shown to be a very high-risk strategy. The US has been the world’s most profitable airline market in recent years largely as a result of the consolidation that took place in the aftermath of the global financial crisis.”
