Corona grounds aviation sector; staff stare at job losses

New Delhi/Mumbai, Mar 20 (IANS) | Publish Date: 3/20/2020 12:23:55 PM IST

Not just truncated operations, the country’s civil aviation sector is facing the real danger of massive downsizing and bankruptcies due to restricted cash flows subsequent to coronavirus outbreak.

Accordingly, industry insiders contend that travel-related restrictions as well as general fear and panic has reduced cash flows to a trickle.

The sector is the worst affected due to the outbreak. Airlines are forced to ground aircraft due to massive cancellations, rebookings, and truncated operations.

Presently, international operations have come to a virtual halt with many airlines deciding to suspend overseas flights.

Similarly, the domestic load factors have taken a hit with a 20 per cent drop in passenger traffic.

“We expect nearly 40 per cent of our aircraft will be grounded at various airports in the coming days as there will not be enough demand to warrant services on certain sectors,” a senior airline executive told IANS.

“Aircraft induction plans may be revised as well. The sector will require government intervention to at least take care of the airport charges.”

At present, India has 700 plus aircraft, with another 1,200 or more which are being delivered to the airlines.

Subsequent to the projected aircraft grounding, pay cuts and job losses will impact the sector’s employees.

“In the short run, if the pandemic continues at this pace in India, we can expect airlines to ground aircraft, send employees on unpaid leaves and go for pay cuts. However, if it lasts longer, then there may even be downsizing and job losses in the industry,” said Kinjal Shah, Vice President, ICRA.

According to Suman Chowdhury, President, Acuite Rating,: “Some airlines have announced pay cuts or leave without pay for their employees which may yield some short-term cost benefits.”

“However, we are not sure whether such steps will be adequate to mitigate the impact on the airline sector which is plagued by pressures not only on profitability but also liquidity. The liquidity position of airline companies will clearly be affected by the sudden drop in future bookings and the refund for past bookings in cancelled flights.”

In a report, CAPA India has said that as a result of the significant reduction in flying, Indian carriers may initially ground around 150 aircraft, with this number expected to increase as more domestic operations are curtailed over the coming weeks.

Already, airline major IndiGo decided to institute pay cuts for a majority of its employees.

A few day’s back, GoAir terminated the service contracts of expatriate pilots.

The move was in line with the reduced international capacity, it said.



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