COVID-19 Unprecedented Impact on the Airline Industry: Analyzing the Long-Term Recovery Plan

The outbreak of COVID-19 has hit the Indian aviation industry hard considering it has been among the worst-impacted sectors due to travel restrictions, job losses, and cost cuts. India has almost 24,400 domestic flights and nearly 6,000 international ones. The government of India has had to finance most of the airlines to cushion the airline industry from the economic impacts of a pandemic. The impact of COVID-19 on the Indian aviation industry had a severe impact on the entire aviation sector in the country leading to job losses and travel restrictions.

1. Falling in Passenger Confidence

The outbreak of COVID-19 has seen a significant reduction in passenger confidence in air travel. The fear of contracting the deadly virus on airplanes, air terminals, and airports have all led to the dwindling of passenger confidence in air travel. Prior to the outbreak of the pandemic, the aviation sector was one of the strongest in India, but following the outbreak of COVID-19, air travel has seen a major reduction in numbers as people are more worried about the risk factor linked with traveling. The reduced confidence has seen fewer people taking flights, leading to fewer profits for the airline industry in the country.

2. Reduction of Traffic at Airports

The decrease in passenger confidence due to the outbreak of COVID-19 has seen airports across the country experiencing a drastic reduction in the number of incoming and outgoing passengers. It has been observed that the number of passengers at airports has reduced by an astounding 80% from the pre-pandemic times, a figure that indicates just how drastically the airline industry has been affected by the coronavirus. Moreover, the airports have also had to reduce their staff as the airline companies have had to make more and more cost cuts, leading to fewer passengers and lesser revenues for the airports in the country.

3. Decrease in Revenues

The aviation industry has seen a drastic decrease in value due to the pandemic as the number of travelers has reduced dramatically. It has been estimated that the airline industry in India is expected to lose around $2.5 billion in revenue in the year 2020 due to the pandemic. The losses have led to cost cuts and losses in jobs across the aviation industry as airline companies are trying to stay afloat amidst these trying times. Moreover, the decrease in revenues has also meant fewer business opportunities for the aviation companies, leading to a further decline in the industry.

4. Job Losses in the Airline Industry

The outbreak of the pandemic has had a serious impact on job losses in the airline industry as the companies have had to make drastic cost cuts and reduce staff in order to cut losses. According to the Centre for Aviation (CAPA), the total number of job losses in the aviation industry due to COVID-19 was estimated to be around 1.2 million. This further adds to the crisis experienced by the aviation industry in India as more and more people are out of work due to the pandemic. The losses are being felt across the aviation industry, such as employees in the ground staff, pilots, and cabin crew.

5. Reduction in Domestic Flights

The outbreak of COVID-19 has led to a significant decrease in the number of domestic flights across the country on account of the various travel restrictions enforced by the government which has been necessary for the safety of the citizens. The restrictions have led to a severe reduction of flights leading to passengers stranded in other states and cities, with fewer and fewer flight options to return home. This has further led to fewer revenue opportunities for the aviation industry resulting in a financial crisis in the industry.

6. International Flights Suspension

The Coronavirus pandemic has also caused an abrupt suspension of international flights in India, as the government enforced stricter travel restrictions to prevent the spread of the virus. The suspension of international flights has been another major blow to the already struggling aviation sector of the country and has caused the number of international flights to reduce drastically. Most of the international flights that are available now are only limited to repatriation, medical, cargo, and diplomatic flights. These international flight suspensions have led to not just fewer revenues but also fewer employment opportunities in the industry.

7. Economic Losses

The Coronavirus pandemic has had far-reaching economic implications for the aviation industry, with their losses amounting to the economic loss of a whole nation. The economic losses suffered due to the pandemic are unprecedented, with a loss estimated to be upwards of Rs. 35,000 crores. This massive economic loss had significant implications for the entire industry and its stakeholders, as the industry was left reeling from the financial losses caused by the pandemic. The effects have been more severe for the smaller airlines, who have had to close down completely due to the losses incurred during the pandemic.

8. Financial Incentives and Reliefs

On the other hand, the Indian government has come forward and announced several financial incentives and reliefs aimed at mitigating the losses incurred by the aviation industry due to the pandemic. The government has announced that they would be providing loans and financial reliefs to aviation companies and discouraging layoffs. The government has also promised to provide protective gear and medical facilities to the staff of airlines to ensure that they are safe during the pandemic. The government has also promised to come to the aid of the small regional airlines with measures such as tax and non-tax reliefs to encourage investments in the aviation sector.

9. Boost to Low-Cost Airlines

The pandemic has been an opportunity for many of the low-cost airlines, who are able to offer commuters a cost-effective alternative to air travel. These airlines have seen a surge in demand as more and more commuters opt for their services as a result of cheaper fares. The low-cost airlines have no significant impact on the economies of scale of the country and hence have been able to continue offering their services despite the pandemic, providing an alternative option to commuters while also helping the aviation industry generate some revenues.

10. Impact of Vaccine

One of the most important developments in the world has been the development of a viable vaccine for the deadly Coronavirus. Though the vaccination has been rolled out in some countries, India is yet to see considerable levels of success in the rollout. The need for an effective vaccine becomes more and more pressing as the industry is struggling under the tough conditions due to the pandemic. With an effective vaccine, the aviation industry in India can make a successful comeback, as more and more people will be able to travel without the fear of getting infected.

Conclusions

The outbreak of COVID-19 has had a devastating effect on the aviation industry in India, leading to financial losses, job losses, and travel restrictions. Though the government has provided financial incentives and measures to alleviate the financial crisis faced by the industry, the situation still remains quite grim with the sector still reeling from the adverse effects of the pandemic. It is, however, expected that the industry will make a successful comeback with the help of factors such as the rollout of a viable vaccine, reduction in travel restrictions, and the utilization of low-cost carriers.

Frequently Asked Questions

Below are the responses to frequently asked questions regarding the impact of COVID-19 on the airline industry and an analysis of its long-term recovery plan.

What has been the impact of the COVID-19 pandemic on the airline industry in India?

The COVID-19 pandemic has had a severe impact on the airline industry in India, leading to catastrophic losses of over $2.5 billion, massive job losses, reduction in passenger confidence, suspension of international flights, and reduction of domestic flights.

Has the government provided any aid to the Indian aviation industry?

Yes, the government has announced several financial incentives and reliefs to the aviation industry in India to help mitigate the losses incurred due to the pandemic. These include measures such as providing loans and loans and financial reliefs to aviation companies and discouraging layoffs, providing protective gear, medical facilities and tax and non-tax reliefs to regional airlines.

When will the airline industry regain its footing in India?

It is expected that the Indian aviation industry will regain its footing with the help of factors such as the rollout of a viable vaccine, reduction in travel restrictions, and the utilization of low-cost carriers.