COVID-19: Take-off after lockdown difficult for Indian airlines

Like Alice in Wonderland, Indian airline companies are struggling to find ways for a smooth take-off once the COVID-19 lockdown is lifted as huge challenges lay ahead, especially in the case of international operations.

Even after India decides to allow the aviation sector to operate, international operations of Indian carriers like IndiGo, Air India, SpiceJet, GoAir and Vistara can start only after destination-countries also decide to open up their air space.

Aviation veterans feel, most countries, especially the US, European nations, Japan and Canada may insist on a number of anti-coronavirus spread safeguards as and when they allow foreign carriers to land at their airports.

The safeguards may include health certification of arriving passengers and crew declaring they free of COVID-19 and mandatory checks to ensure this.

Periodic fumigation of aircraft before they take off from the country of origin may be another mandatory criterion, with these countries insisting on certification from specialised inspection agencies to ensure this.

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With lockdown expected to end on May 3, the airline companies are assuming that they can start their operations from May 4, even as no official confirmation has been done in this regard by the Narendra Modi government.

Curbing the enthusiasm of airlines, Civil Aviation Minister Hardeep Singh Puri even emphasised that no decision has been taken so far to open up air transport.

Even though India has managed to keep the death toll due to COVID under control compared to the US, China, Italy, Spain, the UK and Germany, the Union government will emphasise on social-distancing norms and safeguards in case of ease in flight restrictions.

Month-long hiatus, pinching

Complete lockdown ordered by the government since last month, except in the case of cargo flights, has shaken airline companies financially and almost all of them have started cost cutting with some even reducing salaries and allowances.

As the leasing charges of the aircrafts mount, it has become increasingly difficult for airlines to be grounded.

Cash generated from advance bookings could ease some of the cash flow issues, but that window has come under threat after the Civil Aviation Minister tweeted on Saturday that airlines are “advised” to open bookings only after the government takes a decision on allowing flight operations.

With the unresolved issue related to refund for passengers whose bookings had to be cancelled due to lockdown and private airlines taking bookings in advance, Puri’s advice seems to fall on deaf ears.

The issue of refunds has been discussed in other parts of the world with the US and several European Governments asking airlines to refund the cash and International Air Transport Association (IATA) expressing disappointment over the move.

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Following the issue, many airlines now have resorted to using “credit notes” only to book tickets.

In India, varying interpretations of the government’s refund directive are under discussion and the last word is yet to be heard.

Varying regulations in different countries

Till now there has not been a discussion for synchronised opening up of flight operations across the globe. Therefore, lockdown periods may differ, resulting in different rules and regulations everywhere.

Thus making the relaunching international operations a tough task for airlines across the world and Indian carriers will be no exception to this rule.

Every country will initiate steps to prevent Coronavirus-infected persons from entering its territory and airlines will be asked to ensure compliance, feels a senior executive of Air India.

From simple temperature checks at the airport entry to not allowing persons with COVID-19 symptoms on board, stringent regulations are expected from most countries before they open up for international flights.

While it’s not impossible to implement such rules in a controlled-environment like an airport, crew requires to be trained and there is a cost element involved.

It is also apprehended that some countries may impose penalties on airlines if new regulations are not implemented.

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As of now, it is not clear when important markets like the US, EU, Gulf and South-East Asia will open up.

However, there is a major risk of flight operations getting grounded once again if COVID-19 infection erupts again in any country.

Guessing game over new norms

After 9/11, global aviation changed significantly with several security and safety regulations coming into place.

From ultra-safe cockpit doors that cannot be opened from the outside to banishing standard steel cutlery, airlines had to go for a number of permanent changes.

Apart from more stringent frisking and security checks, commandos on board became mandatory and passengers were not allowed to carry liquids beyond a specific quantity.

Similarly, COVID-19 is all set to bring about a new set of regulations, starting from mandatory masks to social distancing at the airports.

There is a lot of speculation about the middle seats being left vacant to ensure social-distancing, but airlines say that will make flight operations commercially unviable.

Not serving food on domestic flights that may last less than three hours, in the case of long distances like Delhi-Chennai may be fine, but that may not be practical for long haul flights to the US, Japan, the UK, Australia, many Gulf destinations, Singapore or New Zealand.

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All this may become redundant once the coronavirus goes away, but that does not look imminent in the near future as experts are not ruling out resurgence once the lockdown is lifted.

No government bailout

Unlike the US, no financial bailout package is expected for airlines in India. The current mood in the corridors of power indicates that the available resources will be prioritised to rescue the poor masses, farmers and small businesses, rather than propping up large industries.

Any relief to the corporate sector maybe only in the form of easier access to bank finance, more time to repay loans and minor tax breaks, according to highly-placed government sources.

In the US, the aviation sector has been allocated $70 billion while the French Government’s package of over 30 billion Euros benefits various corporates including Air France.

Despite being a strong global player, Singapore Airlines is getting fresh equity infusion through a rights issue and many airlines from West Asia are likely to get significantly large doses of money from their respective governments.

Australia and New Zealand have also worked out aviation sector packages while demands for a bailout are under discussion in various other countries including the UK.

Bringing ATF under GST

The only solace for Indian airlines is the fall in crude prices that will result in lower aviation turbine fuel costs when operations restart.

This silver lining can be brightened if Aviation Turbine Fuel (ATF) is brought under GST – lower and uniform taxation around the country rather than arbitrary high taxes imposed by various State governments.

This could be a permanent relief on the fuel front and other steps like introducing competition in ATF supply are overdue, says a senior executive of a private airline.

For bringing ATF under the ambit of GST, it is not enough if the Central government comes forward to do it as state governments too will have to give up their resistance and allow the GST council to carry out the reform.

Despite the month-long lockdown, there has been no respite to airlines in terms of airport charges and aviation industry sources said only Bangalore airport came forward to waive off parking charges during the period of lockdown.

Revival is a mission impossible

History of the aviation sector in India indicates, once an airline is on the verge of folding up, its revival is virtually impossible. The latest example is Jet Airways.

Despite being a strong, reputed brand of long-standing, Jet has not been revived even a year after it shut down. Similar cases in the past include Kingfisher, NEPC, Damania, Jagson, Paramount.

The government’s renewed efforts to privatise Air India have also been jeopardised due to the pandemic.

Under such circumstances, domestic airlines will try to re-launch operations at the earliest, even if that means operating on certain trunk routes in the beginning.

Over a period of time, they may also try to trim operations, cut down their fleet in line with demand and slash costs to stay afloat which will be a huge challenge.

And the key to their fate remains early control over coronavirus.