COVID-19 has undoubtedly had an impact on world aviation, one that will take years to erase. In India, the effect has been harsh, with heavy losses, but airlines have also proven to be more resilient than once thought. So how has Indian aviation been changed? How will this change impact passengers?
On 23rd March, 2020, the Indian government announced that all passenger flights would be suspended with effect from midnight the next day. After a flurry of last-minute travel, flights were grounded from March 25, the same day a country-wide lockdown was imposed. This ban lasted two whole months and even today some restrictions apply to domestic operations, with international flights still curtailed.
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The ramifications for airlines was swift and severe. India is known to be a highly competitive market consisting of price-sensitive consumers, which has seen low-cost carriers flourish and full-service ones struggle. 2019 wasn’t the greatest year for Indian carriers either, with most reporting losses in a year that was largely-successful globally.
Losses began quickly mounting after the lockdown. Airlines quickly began placing large parts of their staff on leave-without-pay and switching to cargo operations. The second quarter of 2020 (during which flights were grounded for two months) has been one of the worst of airlines on record, with IndiGo reporting a 92% revenue drop.
Despite the crisis, no major Indian airlines have collapsed or even suspended operations fully. In fact, airlines have quickly ramped up capacity once domestic flights restarted and participated in the Vande Bharat Mission. While the long-term effects are yet to be seen, it’s commendable that no airline has shut down despite all of them reporting losses in the last year.
However, a crisis of this magnitude will have a larger market impact. Industry growth will likely be a lot much slower in the next few years, having a ripple effect on plane orders and general expansion. It will be, optimistically, a few years before the industry returns to its double-digit growth, and that is assuming a vaccine is available in the next year.
The government estimates that domestic capacity will be down by 50% and international slightly more. CAPA’s estimates are bleaker, with domestic traffic down 60%, international 70-80%, and 30% of the aviation workforce being laid off. If these figures are accurate, India will be left with a surplus of aircraft, a once-unthinkable idea.
In the middle of all of this, Indian carriers have been drawing up plans to expand their operations. The Vande Bharat Mission (VBM) may have opened up new route options for carriers in the long run, an invaluable piece of market insight. VBM has been a significant boost to airlines, allowing for some international flights and much-needed revenue.
In the short term, low-cost carriers IndiGo and SpiceJet have considered starting long-haul flights to Europe, taking advantage of the repatriation traffic. SpiceJet has already teamed up with wet lease provider Hi Fly to start one-off long-haul flights. Meanwhile, Vistara has also begun it’s long-awaited international flights, flying to London for now, and next to Frankfurt and Paris.
The current crisis has revealed underserved parts of the market, especially international routes. This will be invaluable to future expansion for Indian carriers, who seem to be willing to jump at the chance after the crisis. Foreign airlines have picked up on this trend too, with United adding two new routes from Delhi and Bangalore this week to Chicago and San Francsion, respectively.
While COVID-19 may have slowed overall growth in the market, it has highlighted strategic routes. However, many fear that the worst is not over yet. Only IndiGo has laid off staff yet, and if the downturn continues more airlines could do so too. This wave of layoffs, if they occur, will deal a blow to the industry and set back its recovery.
Impact for passengers
Luckily for passengers, most of the impact will be temporary. While there are fewer flights on many routes, most of these will return once the crisis passes. Between VBM and travel bubble flights, some international markets also have enough capacity. Both inflight and airport amenities have been scaled back, but this is likely to be temporary as well.
However, in the short term, passengers will struggle to find flights to several East Asian countries due to a few travel bubbles in the region and scarce repatriation flights. Domestic flights are also running at 45% capacity, which means some routes may not see direct flights.
Domestic flights are making a recovery, despite the growing number of cases in India, now the second-worst hit in the world. Key airports such as Kolkata and Mumbai are allowing more flights daily, allowing for movement within the country. International flights are also catching up, with more foreign carriers resuming flights every few weeks.
India has recently also allowed on-board catering once again, making for a much more comfortable experience on long-haul flights. This is a positive development for those traveling and resumes a sense of normalcy to travel.
A slow but sure recovery
India is still reeling from the effects of COVID-19, with cases rapidly increasing and the economy shrinking. However, despite this, airlines have managed to make some amount of a recovery on the back of high demand for flights. Until cases in India slow down or a vaccine arrives, airlines will continue to struggle and losses will increase. However, the market will likely make a recovery eventually and slowly retain its position as a growing market.
What do you think about the impact of COVID-19 on Indian aviation? Have you flown during the pandemic? Let us know in the comments below.