The COVID-19 pandemic has delivered severe blows to the aviation industry which has already been under pressure due to various issues. Unprecedented travel restrictions throughout the first half of 2020 have forced aviation operations to all-but grind to a halt as both the leisure and business travel felt the full force of a global lockdown. The whole aviation ecosystem has been impacted by this crisis since the fear of virus forced the world to remain isolated. The crisis is growing longer and deeper than anybody could have imagined.
According to IATA, airlines burned through $51 billion in the June quarter and will burn through $77 billion in cash during the second half of 2020 (almost $13 billion/month or $300,000 per minute) despite the restart of operations. This makes up nearly 80 per cent of $162 billion of bailout money they have already received and airlines will not return to pre-COVID traffic levels until 2024 . The slow recovery in air travel will see the airline industry continuing to burn through cash at an average rate of $5 to $6 billion per month in 2021, IATA forecasts.
Another global agency, the International Civil Aviation Organisation (ICAO), in its latest report, has projected international and domestic aviation could take up to a US$399 billion hit, in terms of gross passenger revenue for the first quarter alone. While the global situation is quite alarming, the situation in India is not any better despite the growth in domestic passenger post lockdown. In India, the domestic traffic has reduced from 5,85,30,038 during March-July 2019 to 1,20,84,952 during March-July 2020. The revenue of Indian carriers has reduced from Rs 25,517 crore during April-June 2019 to Rs 3,651 crore during April-June 2020. Airport operators also saw their revenues decline to ₹894 crore in the June quarter of 2020 from ₹5,745 crore a year earlier.
Consultancy firm CAPA India estimated that Indian airlines are expected to report consolidated losses of $6-6.5 billion this fiscal and an estimated $4.5-5 billion of funding will be required to overcome the covid-19 crisis. Meanwhile, Indian carriers have asked the government to set up an interest-free line of credit of at least $1.5 billion for the aviation sector.
Thought leaders of the industry feels that there would be fewer players as the industry is all set to witness consolidation in near future. They predict that COVID-19 would make airlines more resilient as most airlines are restructuring in a very positive way.
Optimism in the air
However, airlines are optimistic with a hope that coming months will bring some respite. “As the world starts to adjust to the next phase of the pandemic and international borders gradually re-open, we are optimistic this will bring some stability for global travel demand to return. We look forward to resuming passenger services to India when it is commercially and operationally feasible to do so. In the meantime, we will continue to support repatriation flights to/from the country including Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kochi, Kolkata, Mumbai, and Thiruvananthapuram - facilitating travel and helping stranded Indians return home,” Jabr Al-Azeeby, Vice President - India & Nepal, Emirates Airline said. Emirates operate passenger services to more than 90 destinations via Dubai and is committed to fully restoring its network.
The Indian aviation industry is witnessing a continued recovery in domestic passenger traffic since the opening up of the service. The domestic market saw a 37 per cent growth in traffic to 39 lakh passengers in September over August 2020. The increase in capacity deployment helped airline in attaining the growth. However, it will take time to come back at pre-COVID level.
“We believe that it may take anywhere between 12-18 months to recover from the current situation and come back to the Pre-COVID levels of travel demand, also depending upon how other countries resume their international operations and how receptive are they towards international travellers. However, we do foresee a rise in demand at the onset of the festive season, with people travelling by air to meet their family and friends and with air travel being the safest mode to travel, this will also contribute to the overall rise in demand,” Sanjay Kumar, Chief Strategy and Revenue Officer, IndiGo, said and added that travel demand has shown consistent growth after the opening of the domestic markets since May 25, 2020. “We have seen a positive trend over the first 100 days of resumption of operations post the lockdown including the steadily rising PLF, unit revenue and future bookings on the back of increasing customer confidence in air travel. We are bullish that our passenger loads will grow with the increase in capacity across our network,” he said and hoped that if the regulation around the various states becomes consistent and more liberal in terms of rules and regulations, we should see much faster growth in passenger numbers.
Vistara too is augmenting its operation to come back to pre-COVID level. “Since the resumption of operations, we have been constantly monitoring passenger demand and have been scaling up our operations in a calibrated manner. We are operating at over 50 per cent of our pre-COVID capacity, connecting 27 domestic destinations (as on 08 October 2020). We plan to further scale it up to 60 per cent of our pre-covid capacity in the coming weeks, which is the capacity allowed by the Ministry of Civil Aviation,” a Spokesperson of Vistara said. Vistara was operating operating close to 200 flights daily in the domestic sector before pandemic.
With demand from passenger gradually going up, all these carriers are incorporating innovations in its overall operations to infuse confidence among travelers. “We introduced our Lean Clean Flying Machine initiative, aimed to educate our passengers about the steps being taken for their safety and safety of others, once air travel resumed in May to enhance their confidence in air travel,” Kumar said highlighting the findings of their survey that says 95 per customers prioritize health and wellness of the airline staff, while 92 per cent feel that sanitation and safety protocols by airlines need to be in place. Personal safety kits (90%) and contactless travel experience (89%) were next on priority. “As an industry we have done well in communicating all our safety measures and protocols across platforms, with almost 93% of travellers being aware of them,” Kumar said and shared that indigo added the 6E Double Seat option, for a single passenger to book 2 adjacent seats for added emotional security based on the customer demand. Moreover, airlines are also providing complementary travel insurance globally. “Additionally, IndiGo’s travel assistance has hospitalization benefits along with coverage for COVID-19. Complementary travel insurance is being provided by Karvat Cover-More Assist Private Limited underwritten by Bharti Axa General Insurance,” Kumar revealed that IndiGo has re-started Tiffin services through pre-booking.
According to Vistara, safety and hygiene will continue to be key considerations for customers and technology will play a key role in ensuring that throughout the passenger’s journey. “At Vistara, we were already on our digital transformation journey which has only been fast tracked due to the pandemic. Initiative taken by Vistara like casting of kiosk screens on passenger mobile, scan & fly, Self-tagging, self-baggage drop, self-boarding, e-gates, biometrics/face recognition, e-boarding passes and bag tags are all touchless solutions which will go a long way to build confidence in flying again. We also launched an integrated campaign #FlyingFeelSafeAgain, aimed at generating awareness about air travel being the safest mode of travel during the Covid-19 crisis and informing customers about the airline’s various initiatives, “the Spokesperson added.
Emirates too always placed customers first and their top priority is also the health and safety of the communities we serve. “We know customers are yearning to fly and we are very proud to lead the way in boosting confidence for international travel. We modified our services to mitigate risk of infection, ensuring we always keep in line with the latest hygiene and safety protocols made by authorities and health experts. We were also the first airline in the world to offer free, global cover for COVID-19 related costs. Customers can now travel with confidence, as Emirates will cover medical expenses of up to EUR 150,000 and quarantine costs of EUR 100 per day for 14 days, should they be diagnosed with COVID-19 during their travel, while they are away from home. This cover is immediately effective for customers flying on Emirates until 31 December 2020 and is valid for 31 days from the moment they fly the first sector of their journey,” Al-Azeeby said.
Emirates also revised their booking policies to offer customers peace of mind while planning their travels. “Customers who purchase an Emirates ticket for travel on or before 31 March 2021, can enjoy generous rebooking terms and options, if they have to change their travel plans. Customers have options to change their travel dates, extend their ticket validity for 2 years, or convert their ticket into a travel voucher to use against any future flight-related purchase for themselves or their family and friends,” he said.
Sluggish demand from corporate travel
Despite all health and safety measure, traveler’s confidence are still low. While leisure and essential travel is taking place, although in slower pace, corporate/business travel is yet to be back to the market, not even with slower pace. Business travel contributes substantially in airlines’ overall business.
According to Al-Azeeby, corporate travel is heavily dependent on the reopening and recovery of economies across the world. “While some businesses may continue to use virtual meetings, we are optimistic corporate and leisure travel will resume as the world adjusts to the next phase of the pandemic. We’re currently seeing a positive trend in MICE travel across parts of Asia, which is a very positive sign of economic recovery. However, these are still early times. For us, we remain committed to serving our customers and we hope to resume our full complement of services and destinations as quickly and safely as the situation allows,” Al-Azeeby said.
Vistara also feels that a slow but consistent increase in business travel can be observed as people have started going back to their place of work. “In our customer study concluded in June 2020, 65 percent of the respondents mentioned that they expect to take their next Vistara flight before December 2020. 35 percent of the respondents expected to fly for business while 25 percent of them indicated that they would fly to visit their friends and relatives,” the Spokesperson informed.
Airlines across the globe have adopted various humanitarian measures to support a larger section of the society by giving complimentary tickets to health professionals, teachers or by extending other kind of support.
In order to contribute towards the society and help our nation in these difficult times, IndiGo operated cargo flights to ferry vital supplies and Vande Bharat repatriation flights for stranded Indian citizens. “We transported medicine, equipment and relief supplies from one part of the country to another, while adhering to all the precautionary measures. In addition to this, we also created the first ever blood plasma corridor to save the life of a patient suffering from COVID-19. The plasma units were transported on IndiGo CarGo from Bengaluru to Srinagar via connecting flights,” Kumar informed.
Community services is deep-rooted in Vistara’s culture and the airlines strongly believes in giving back to the local communities they operate in. “As part of our ongoing efforts, we had launched the Vistara Wellness Initiative in April this year by collaborating with Indian Hotels Company Limited (IHCL) to distribute over 50,000 long shelf-life nutritious food items to the frontline health workers. Since then, we have been able to distribute over 100,000 nutrition and sanitisation items to thousands of people across the country,” Vistara Spokesperson informed.
Emirates too kept communities connected through repatriation flights and cargo operations. “While waiting for borders to re-open, we actively engaged with embassies and consulates to support repatriation of stranded travellers and citizens, including our special flights to India. We also scaled up our SkyCargo network to maintain trade lanes and movement of essential goods across the world,” Al-Azeeby said and added that Emirates ensured an adequate flow of critical supplies such as pharmaceutical products, and perishables.
Despite all these challenges, airlines are keeping connect with the trade partners regularly. “We are grateful for our trade partners across the world who continue to play a vital role in our operations and success and we look forward to supporting and strengthening such crucial ties,” Al-Azeeby said. The pandemic has severely impacted all aspects of the travel industry and travel trade is a very integral part of it. “We have tried to maintain constant and transparent communication with our trade partners as we are collectively trying to re-build demand in the market,” the Vistara Spokesperson said.
We all know that rising to the challenges of a crisis is nothing new to airlines and the broader aviation, travel and tourism sector. Just as the industry has overcome past health epidemics, economic recessions, unfortunate safety incidents, and other debilitating events, it too will overcome the COVID-19 crisis.