Fliers Stop Flying, Airlines Losses Mount; Is Anyone Gaining?
While the fliers have not yet resumed flying, it is now being widely recognised that the global aviation industry is going through the toughest-ever phase in its 100-year old history. The uncertainty of survival is bound to cause unprecedented turmoil and has fully paralysed the sector.
Rating agency Crisil reports that the unprecedented plunge in demand for air travel will badly impact the financials of airlines. It reports that the aviation industry will lose revenue to the tune of Rs 240,000–250,000 million. Airlines will see more than 70% of the losses, and airport operators will lose Rs 50,000 million and airport retailers, including retail, food and beverages and duty-free outlets will lose Rs 17,000 million.
In other words, the general public could save up to Rs 240,000–250,000 million by not availing air services. Things such as food and beverages and duty-free items and even flying are after all dispensable for fliers.
Not availing air services also causes less fuel burn and a cleaner environment.
The fear of corona has driven away the fliers. In June 2019, low-cost airline Spicejet had 94% occupancy, it is 68% in June 2020. At this level, the airline can not break even. It means not operating will be more profitable.
India’s two listed airlines, IndiGo and SpiceJet, lost up to Rs 125 billion across January-March and April-June quarters.
Operations at India’s two biggest airports – Delhi and Mumbai – dropped by 67% and 87% in June 2020 respectively.