With 80% Flights Grounded Globally, Aviation Sector Heading for a Crash it May Not Easily Recover From
With commercial air traffic coming to a screeching halt due to the lockdowns imposed by governments around the world in order to contain the Covid-19 pandemic, the aviation sector is facing one of its worst crisis ever.
In India’s case, CAPA India estimated in late March that the country’s industry could incur a loss of USD 3.3 to USD 3.6 billion if flight operations remained halted till the end of June.
The report said that the April-June quarter, which is traditionally considered one of the stronger quarters of the fiscal year for the Indian aviation industry was looking to be a washout given the circumstances.
But Indian airlines are not the only ones to have been affected by the pandemic.
Globally, the number of Commercial flights tracked by FlightRadar, a global flight tracking service, has seen a sharp decline over the past month as more and more countries put restrictions on air travel as a response to the Covid-19 pandemic.
Tracking data for the past 90 days shows that the number of commercial flights declined from over 100,000 till mid-March to less than 25,000 as on April 19, a fall of about 75 per cent.
As per the April 2020 edition of ‘World Economic Prospects’ by Oxford Economics, the global GDP is likely to contract by about 7 per cent in H1 (January-June) 2020 with much of the economy under some form of lockdown.
According to the report, the recession due to Covid-19 is expected to be much deeper than the Global Financial Crisis of 2008 with output loss to be more than twice as large as the GFC.
As of early April, 80 per cent of the worldwide flights were grounded, according to an assessment by the International Air Transport Association (IATA).
The IATA assessment dated April 14 said that global air traffic (RPKs) in 2020 has halved compared to 2019 whereas passenger revenues of airlines have seen a 55 per cent decline or a loss of USD 314 billion in 2020 compared to 2019 levels. The study assumed the international lockdown to remain in place until June-end.
In comparison, the 2003 outbreak of SARS had caused losses worth USD 7 billion, as per Cirium.
The IATA expected the return to air travel to occur in stages with domestic markets assumed to open in Q3 (July-September) followed by the international ones much later.
Back in India, the Directorate General of Civil Aviation (DGCA), on Sunday, instructed the Indian airlines to refrain from booking tickets for the journeys to be undertaken May 4 onwards after the national lockdown ends on May 3.
“No decision has been taken so far to commence operations of domestic & International flights post the Lockdown. All Airlines have been directed by DGCA to refrain from booking tickets. They shall be given sufficient notice and time for restarting operations,” Union Minister for Civil Aviation, Hardeep Singh Puri tweeted on Sunday.