Indian airlines in immediate danger of insolvency: IATA to Modi
Indian airlines are currently in "grave and immediate danger" of insolvency as a result of disruption in air travel due to the coronavirus pandemic that can reduce about 5.75 lakh jobs in the Indian aviation industry, global airlines body IATA has told Prime Minister Narendra Modi. In a letter to the PM dated March 24, Alexandre De Juniac, Director General of the International Air Transport Association (IATA), said, "IATA estimates that COVID-19 could result in a 9 per cent loss in passenger volumes and US$2.1 billion loss in passenger base revenues for the air transport market in India in 2020".
India is currently under a 21-day lockdown from March 25 to curb the spread of coronavirus. Therefore, all domestic and international commercial flights have been suspended during this period.
"The disruptions in air travel from COVID-19 could reduce about 575,000 jobs and US$3.2 billion in GDP supported by the air transport industry in India," Juniac said in the letter.
IATA has around 300 airlines as its members, comprising around 82 percent air traffic globally.
"Unless government action is taken now, the post-pandemic economic recovery in India would be seriously impeded," Juniac stated in the letter, which has been accessed by PTI.
Various Indian airlines have already announced their cost-cutting measures as there has been a drastic fall in revenues due to the virus outbreak.
IndiGo has announced that its senior employees would be taking a pay cut of up to 25 percent. GoAir has laid off its ex-pat pilots, introduced leave without pay for employees on a rotational basis, and announced a pay cut for all employees. Vistara stated on Thursday that its senior employees would go on compulsory leave without pay for up to three days.
Prior to the outbreak of COVID-19, India's air transport industry's economic contribution was estimated at US$35 billion, supporting 6.2 million jobs and contributing 1.5 percent to GDP in India, the IATA DG said.
However, the COVID-19 pandemic has led to the "destruction" of air travel demand on an "unprecedented" scale, Juniac said.
"India's scheduled carriers are currently in the grave and immediate danger of insolvency. Cessation of operations would trigger a host of serious consequences. The contributions that the airline industry makes to the economy of India will be wiped out if the airline industry collapses," Juniac stated.
At stake is not merely the survival of the airlines and related industries, but whether a "safe, efficient, and viable commercial aviation system" will be available to contribute to the post-COVID-19 restoration and recovery of trade, travel, and indeed the economy of India itself, Juniac noted in the letter.
More than 720 people have been infected and 17 people have died due to novel coronavirus in India as on Friday, according to the Union health ministry.