Recovery of Aviation Industry

‘High costs and low yields’

Air transport speaks to a little portion of GDP yet is firmly connected to the activities of different sectors, particularly airports and airplane producing – altogether thought to be here as the “aviation industry”. The flight business is a key enabler of numerous other economic activities.The emotional drop sought after for passenger air transport (and cargo, less extent) because of the COVID-19 pandemic and control measures has undermined the reasonability of numerous organizations in both the air transport area and the remainder of the flying business, with numerous job positions at stake.

When we talk about the recovery of aviation industry in the midst of ongoing pandemic; the travel behavior is changing to a whole new approach and people looking substitutions. The major problem is, the most industry executives talk about when will they get back to 2019 levels but anyone who is talking about even using 2019 as a reference point is stuck in the past; things will be diverse for a longer time span if not permanently.

The airlines that understand that where people will travel and how will they travel will emerge out of this better. All the money sponsored to these airlines who are still thinking how to get back to 2019 is a waste of funds they should instead deploy it in new business models and new travel modes.

To talk about the loss faced by the aviation industry due to the lockdown period, it would nearly amount to Rs. 25,000 crore. The losses would reverse the growth trend of 11% per annum; making the sector most adversely affected in the economy. Taking this further, the government made announcements of utilizing only 60% of the present space while the rest will be restricted to defense use; with having more airspace available, air routes would be shortened benefitting the airlines and the passengers that would bring down both travel time and fuel cost; this would amount to Rs. 1000 crore per year for the sector.

Would vaccine make things any better?
Considering the current situation and thinking that vaccine would resolve these problems is pretty unrealistic and the industry needs to think how it is going to manage till then. the whole travel chain has to be re-thought.

In the long term we need to plan for the fact that fewer people are going to travel primarily because of the health issues and airlines need to re-adjust. The flight business has frequently been an objective of government policies, the COVID-19 emergency has encouraged another set-up of credits, advance ensures, wage appropriations and value infusions, raising worries about rival competitors and the proficient utilization of public resources.

To advance a sustainable trajectory for the airline business, government policies ought to organize area wise measures and competition. They need to:

• Find some kind of harmony between the requirement for help and the danger of mutilating rivalry - In occurrences where firm-explicit help measures are fundamental or have been implemented already, these ought not to tilt the playing field with different firms in the aviation industry.

• Save business elements and permit exit – As demand might be structurally unique in relation to that before the crisis and potentially lower, governments should cultivate restructuring and try not to back non-feasible firms, yet support displaced workers.

• Empower interests in the green transition and accordingly increment the long-term resilience of the airline business, for example by settling on firm-level support decisions dependent upon environmental upgrades.

• Assist sustainability along the entire aviation value chain, including aircrafts producers and airports. Since co-ordination across areas and with different policies is crucial, policy reactions to the COVID-19 crisis in the aviation industry should be incorporated in the low-carbon transition methodologies implemented or being talked about in numerous The Organization for Economic Co-operation and Development (OECD) nations.

Thank you.

Regards,

Jaspreet Kaur Gurtatta,

Kautilya,

IBS Mumbai.